Gold rises to four-month highs on US-Iran confrontation in Iraq

Gold, a classic haven asset, has jumped to four-month highs with the US and Iran moving closer to open confrontation in Iraq. 

The yellow metal is currently trading at $1,539 per Oz, the highest level since Sept. 5, representing a 0.63% gain on the day. 

The US launched an airstrike on Baghdad airport on Friday, killing Iran's most celebrated military official Qassem Soleimani. The missile attack confirmed by Iranian and US officials also killed Abu Mahdi al-Muhandis, the deputy commander of Iran-backed militias. 

The US move has come following Iranian militias' attempt to storm the American embassy on Tuesday and has brought the two nations closer to a direct confrontation. 

Geopolitical analysts think the situation has escalated to a point of no return.  "Make no mistake - this is bigger than taking out Osama Bin Laden," Ranj Alaaldin, fellow, Brookings Institution Doha, and director, Carnegie Corporation tweeted a few minutes before press time. 

Negar Mortazavi, diplomatic correspondent for Independent and analyst for BBC, Aljazeera, CGTN, thinks the US move is a major escalation and will have serious geopolitical consequences for the region. 

Gold, therefore, is drawing haven bids. The yellow metal will likely extend gains during the European and American trading hours as markets have turned risk-averse. The futures on the S&P 500 are now reporting a 0.5% drop versus a 0.2% gain seen in early Asia. 

Oil prices have risen sharply and will likely weigh over the risk assets in the oil-dependent emerging markets, adding to the bid tone around the zero-yielding safe-haven metal. 

Technical levels