- Israel hits Iran nuclear facilities; Tehran launches drones
- Attacks add to the bullish mood in the gold market, analyst says
- Commerzbank expect a gold price of $3,400/oz by end of this year
June 13 (Reuters) - Gold prices rose to a near two-month high on Friday, driven by safe-haven demand as Israel's strikes on Iran escalated tensions in the Middle East.
Spot gold was up 1.2% at $3,423.49 an ounce as of 0951 GMT, after hitting its highest point since April 22 earlier in the session. Bullion has gained more than 3.5% so far this week.
U.S. gold futures gained 1.2% to $3,444.10.
The Middle East was thrust into renewed conflict after Israel launched strikes against Iran, saying it targeted nuclear facilities, ballistic missile factories and military commanders and that this was the start of a prolonged operation to prevent Tehran from building an atomic weapon.
Iran launched about 100 drones towards Israeli territory in retaliation.
The rising tensions add another layer of market uncertainty, coming on the heels of U.S. President Donald Trump's trade policies.
"For now, the attacks add to the bullish mood in the gold market ... with the situation being highly in flux, it is too early to tell whether this shock will lastingly lift prices," said Carsten Menke, an analyst at Julius Baer.
"Should there be disruptions to oil supplies - either directly due to attacks or indirectly due to politically imposed measures - or should the conflict spread in the region, then gold could show a more lasting reaction."
Gold is used as a safe investment during times of geopolitical and economic uncertainty. It also tends to thrive in a low-interest-rate environment.
"We now expect a gold price of $3,400 per troy ounce by the end of this year and $3,600 by the end of next year," Commerzbank said in a note.
Demand for physical gold weakened across major Asian hubs this week as soaring prices deterred buyers, with rates in India surging past the psychologically key 100,000-rupee mark.
Spot silver was steady at $36.36 per ounce, platinum fell 1.5% to $1,274.30, and palladium rose 0.5% to $1,061.06. All three metals were set for weekly gains.
Reporting by Anushree Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips and Tasim Zahid
Source: Reuters