Gold prices surged to fresh seven-week highs in Asian trade on Friday, closing in on record highs as escalating geopolitical tensions between Israel and Iran drove a flight to safety across global markets.
By 3:25 pm AEST (5:25 am GMT), spot gold rose $34.72 or 1% to US$3,422.75 per ounce, as investors sought refuge in traditional safe-haven assets.
The surge came after Israel confirmed it had launched strikes on Iranian nuclear facilities, claiming the operation was intended to block Tehran from acquiring atomic weapons.
Brigadier General Effie Deffrin, Israel’s chief army spokesman, also noted that “in the last few hours, Iran has launched more than 100 drones toward Israel, and all the defence systems are acting to intercept the threats”.
Meanwhile, United States President Donald Trump is set to convene an emergency meeting of the National Security Council to address the deteriorating situation.
However, increasing safe-haven demand for the U.S. dollar could limit gold’s upside momentum, as the dollar tends to rise in tandem with geopolitical stress, potentially capping gains in dollar-denominated assets like gold.
While markets continue to track developments in the Middle East, economic data is taking a backseat. The University of Michigan’s consumer sentiment index and inflation expectations are due later today, though traders are expected to remain focused on geopolitical headlines.
Meanwhile, expectations for a September interest rate cut by the U.S. Federal Reserve have firmed following a string of weaker-than-expected inflation prints.
According to the CME FedWatch Tool, markets now price in a 59.3% chance of a 25-basis-point cut at the Fed’s September meeting.
