The death of Iranian General Qasem Soleimani has sent the global financial market into a tailspin. The spot gold prices jumped 2 per cent to $1,587 an ounce, the highest since April 2013. The tension between the two states has led other safe haven assets to edge higher following the killing of the top military commander of Iran.
Iran on Sunday said it will no longer abide by any of the limits imposed by 2015 nuclear deal, sparking fears of a military conflict. Besides, Iraq's parliament urged its leaders to expel US-led coalition troops from the country.
Gold prices on Monday also drew support from the weakening rupee against the US dollar, as India is one of the biggest importers of Gold. Bullion prices jumped to Rs 41,096 per 10 gram. The rupee slipped beyond Rs 72 a dollar. At 1.39 p.m. on Monday, it was trading at Rs 72.02 a dollar, lower by 21 paise on its previous close.
"Going forward, the major focus will continue to be on developments related to geopolitical tensions in the Middle East and its impact on global sentiments. Escalating tensions may dent market risk appetite and weigh down on riskier assets like global equity markets and commodities like base metals," said Ravindra Rao, VP and Head Commodity Research of Kotak Securities.
"However, this may continue to lend support to safe haven assets like gold and silver and will also be supportive to crude oil prices amid worries over supply disruption from the region. The Middle East accounts for nearly half of the world's oil production, while Iraq is the second largest producer among the Organization of the Petroleum Exporting Countries (OPEC)", Rao added.
In a series of aggressive tweets, US President Donald Trump said on Sunday: "They (Iran) attacked us, & we hit back. If they attack again, which I would strongly advise them not to do, we will hit them harder than they have ever been hit before!"
(With inputs from IANS)