US-Iran tension boosts already surging gold prices: analysts

Pittsburgh — The recent tensions between the US and Iran have reinforced already surging gold prices from 2019, according to several commodities analysts Monday.

The price of gold rose Friday after a US airstrike in Baghdad killed top Iranian commander Qassem Soleimani. The price of gold continued to trend upward Monday amid fears of retaliation from Iran.

Analysts at Commerzbank said gold prices would increase to record levels as a result of the international tensions because of the precious metal's status as a "safe haven" during such events.

"The escalation of the situation in the Middle East has caused investors to seek refuge in gold, a traditional safe haven in times of crisis," Commerzbank analysts said in a report Monday. "Consequently, the gold price has gained significantly since the start of the year and has climbed this morning to $1,580/ounce. This puts it at its highest level since April 2013."

Goldman Sachs said that gold had already gained more than $100/oz over the past month on a weak US dollar and rising inflation expectations, according to a research note Monday. However, analysts at Goldman echoed the safe haven sentiment surrounding gold.

"Spikes in geopolitical tensions lead to higher gold prices when they are severe enough to cause currency debasement," Goldman analysts said. "Therefore, additional escalation in US-Iranian tensions could further boost gold prices."

Analysts at Credit Suisse also expected gold prices to surge in 2020 as a result of other factors, regardless of the events in Iran.

"Gold was rallying even prior to this and for reasons that appear less short-lived," Credit Suisse analysts said in a research report Monday, citing the weaker US dollar and US-China trade uncertainty.

Credit Suisse projected gold prices to average around $1,570/oz in 2020.

The COMEX gold spot price settled at $1,549.20/oz Friday, up drastically from $1,282.70/oz on January 4, 2019.

-- Nick Lazzaro, nick.lazzaro@spglobal.com

-- Edited by Zac Aiuppa, newsdesk@spglobal.com