Investors are now waiting to see whether President Donald Trump responds in kind.
Prices jumped more than 2% after Tehran fired a series of rockets at US-Iraqi bases early Wednesday morning Baghdad time.
After the spike, gold pared gains as Iran’s foreign minister said that the country isn’t seeking a war, although it would defend itself against any further aggression.
It wasn’t immediately clear whether there were casualties or major damage from the attacks.
But Trump tweeted: “All is well!”, and “So far, so good!”, adding that assessments were under way and he’ll make a broader statement on Wednesday morning in the US.
Bullion is off to a blistering start in 2020 driven by the fast-rising hostilities in the Middle East, which are helping the commodity build on last year’s 18% gain.
While US equities have risen to a series of records over the past 12 months, bullion has also advanced as the Federal Reserve eased policy, governments added gold to reserves, and holdings in exchange-traded funds rose.
“I’m very surprised that Iran has chosen such an overt way to retaliate, they’re almost inviting the US to unleash a shock-and awe response,” said Jeffrey Halley, a senior market analyst at Oanda Corp.
“I can only see gold and silver and oil continuing to consolidate these big gains in Asia this morning.”
Spot gold jumped as much as 2.4% to US$1,611.42 an ounce, the highest since 2013, and was at US$1,593.86 at 5.49am in London.
Futures jumped 2.5%.
On Tuesday, before the latest upheaval, holdings in bullion-backed ETFs rose to the highest since November, a Bloomberg tally showed.
Gold support
In other markets, US stock futures and Asian equities pared earlier declines, while Brent crude first rose more than 5%, then traded 1.3% higher.
Among equities, gold miners Newcrest Mining Ltd climbed as much as 5.1%, while Evolution Mining Ltd added as much as 6.1%.
Gold may breach US$1,625 this quarter as investors seek protection from equity market drawdowns and the tensions in the Middle East, Citigroup Inc said in a Jan 6 note.
Goldman Sachs Group Inc said earlier this week that the metal may prove a better bet than oil amid the crisis.
“The conditions are quite amenable to further upside in gold,” Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd, said in a Bloomberg TV interview.
“The geopolitical risk premium we’ve seen come back into the market is quite strong, and if these types of tensions remain, I suspect we’ll see much higher prices.”
The Islamic Revolutionary Guard Corps claimed responsibility for the barrage, which the Pentagon said was launched from Iran.
Fifteen missiles were launched, 10 of which hit the Ayn al-Asad base and another facility in Erbil, US officials said.
Another struck an air base near Baghdad, while four fell out of the sky.
Investors will turn their attention to the US response, the scope of which could depend on the damage, and whether any Americans were killed or injured.
Trump has shown restraint in previous attacks blamed on Iran that didn’t kill US citizens, but the nation’s quick claim of responsibility and the targeting of US military outposts make some sort of retaliation more likely.