Picture: 123RF/KTS DESIGN
Picture: 123RF/KTS DESIGN

Bengaluru — Gold rose more than 1% on Friday and was within a striking distance of the six-year high reached in September, as investors flocked to the safe-haven metal after a senior Iranian military official was killed in an air strike authorised by the US.

Tensions flared in the Middle East after Iranian Major-Gen Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi al-Muhandis were killed in the air strike on their convoy at Baghdad airport.

Spot gold was up 1.2% at $1,547.19 an ounce as of 10.12am GMT, having touched its highest since early September, when bullion scaled a multi-year peak of $1,557. US gold futures rose 1.4% to $1,549.70.

“We are seeing gold and silver continue to build on the gains we saw towards the end of December and there is no doubt that the latest developments with the attack in Iraq has taken us up to this level,” Saxo Bank analyst Ole Hansen said.

Iraq’s prime minister condemned the air strike and said it would “light the fuse of a destructive war in Iraq”.

Gold, considered to be a safe investment in times of political and economic uncertainties, has gained more than 2% so far this week. Holdings of the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, on Thursday rose 0.2% to their highest since November 29.

“From a technical perspective, key level of support is just around $1,520 and as long as we stay above that level we are going to see further gains come into the market,” Hansen said, adding that the sell-off in equity markets was lending further support to gold. Other safe havens also rallied with the yen hitting a two-month high against the dollar.

US 10-year treasury yields fell to their lowest in three weeks.

Investors now await the minutes of the US Federal Reserve’s December 10-11 policy meeting due at 7pm GMT. “All the while, gold remains very well supported by the strong seasonal performance for gold in January. The recent high of $1,557 is the critical resistance to watch,” Stephen Innes, a market strategist at AxiTrader said in a note.

Mirroring gains in gold, silver hit a more than two-month high of $18.26 and was last up 0.7% to $18.15 an ounce. Platinum rose 1.3% to $990.80, heading for about a 5% weekly gain. Palladium slipped 0.1% to $1,957.49, but was on track for a 3% weekly gain.

Reuters