PRECIOUS-Gold marches higher on fears of prolonged Middle East conflict
By Ashitha Shivaprasad
March 2 (Reuters) - Safe‑haven gold advanced on Monday, driven by escalating concerns of prolonged conflict in the Middle East after U.S. and Israeli strikes against Iran.
Spot gold XAU= gained 2% to $5,384.41 an ounce by 1406 GMT after hitting a session high of $5,418.50. Prices touched a record peak of $5,594.82 on January 29.
U.S. gold futures GCcv1 rose 2.9% to $5,397.40 an ounce.
"Right now, the market is attempting to figure out whether these attacks are going to be followed up over the next several weeks," said David Meger, director of metals trading at High Ridge Futures. "I think it's that uncertainty that is more than likely to support prices."
The U.S.-Israeli air war against Iran expanded with no end in sight, engulfing Lebanon as Israel responded to strikes by Hezbollah while Tehran fired missiles and drones at Israel, Gulf states and a British air base in far-away Cyprus.
Analysts at SP Angel noted that rising geopolitical fragmentation has prompted BRIC central banks to reduce their exposure to dollar‑denominated assets in favour of gold, adding that they expect this theme to continue.
Gold, long regarded as a safe asset in times of uncertainty, has notched multiple record highs and climbed nearly 25% so far this year. The rally builds on its exceptional 64% jump in 2025, fuelled by robust central‑bank purchases, strong inflows into exchange‑traded funds and a shift toward looser U.S. monetary policy.
Meanwhile, BNP Paribas said it sees physical gold investment demand as a key driver this year. It added that physically backed ETFs have already accumulated about 2 million ounces this year and it expects higher purchases by Chinese bar and coin investors than in 2025.
On the data front, the market will be watching the ADP employment report, weekly jobless claims and the non‑farm payrolls report this week.
Among other metals, spot silver XAG= eased 0.6% to $93.23 an ounce after touching its highest since January 30.
Spot platinum XPT= fell 1.7% to $2,324.40 while palladium XPD= lost 1.1% to $1,767.00.
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