Gold rallies 2% to fresh highs in risk-off start to the week

Gold os popping to fresh highs in a gap from $1551 to a high of $1587.93. The price of gold is elevated following a bid for safe-haven assets which are benefitting from tensions in the Middle East escalating due to last week's killing of a leading Iranian commander in a US airstrike in Iraq.

The US drone strike which killed Major General Qassem Soleimani, head of the Quds Force, the Iranian Supreme Leader, Ayatollah Ali Khamenei, said harsh revenge awaited the (US) “criminals”. while US President Donald Trump said over the weekend America is ready to strike 52 Iranian sites “very hard” if US assets are attacked. Subsequently, the price of the yellow metal is holding in the $1,550s following a risk-off close on Friday in US benchmarks which moved back from their all-time peaks in response to Friday’s headlines as the Dow Jones, S&P 500 and Nasdaq Composite declined 0.81%, 0.71% and 0.79%, respectively.

US/Iran updates and tensions heating up

Iraq’s parliament called for US and other foreign troops to leave the country although the US and French are urging for them to unite to fight ISIS together in the region. French Foreign Minister Jean-Yves Le Drian said that he had spoken by phone with Iraq's prime minister, and stressed the importance of allowing the international coalition to fight against Islamic State militants in Iraq and Syria. Also today, Iran said, in the latest escalation, that it would not respect any limits set down in the 2015 nuclear deal with six major powers on the number of uranium enrichment centrifuges it could use, which meant there would be no limits on its enrichment capacity, according to state television.

Gold levels

The calendar year 2019 saw gold advancing 18 per cent — the highest return since CY2010, when it had generated a return of nearly 30 per cent. At this juncture, a break of 1590 opens risk to 1603 and 1632.