Gold holds steady as Iran strikes trigger increased safe-haven buying

Gold steadied after its hike on Tuesday, as markets weighed possible next steps in a worsening Middle East conflict in the wake of Israel's vow to retaliate against Iran's missile attacks.

The metal traded around $2,660 an ounce after ending 1.1 per cent higher in the prior session when Iran fired roughly 200 ballistic missiles at Israel. President Benjamin Netanyahu labelled the action a "big mistake" and pledged to make Iran "pay for it." The US is reportedly helping prepare efforts to build up Israel's defence, according to an earlier report.

“Geopolitical headlines often trigger immediate market reactions, but these tend to reverse if no significant assets are impacted,” said Charu Chanana, a strategist at Saxo Capital Markets Pte, who added that gold remained an attractive hedge. “When considering how markets might react next, the key worry would be risks of an escalation, particularly if Iran’s oil assets could be targeted.”

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Gold has risen about 30 per cent this year, which set a succession of new highs. Recent increases have been spurred by hopes of rate cuts from the Fed, which kicked off its cutting cycle last month with a 50-basis-point move.

In addition to the future escalation of conflicts in the Middle East, it is on Friday that traders will be looking at a US jobs report, which could become critical input into the Fed's rate-cutting timeline. Swaps traders are pricing in a one-in-three chance of another half-point cut from the Fed in November.

Spot gold was little changed at $2,660.15 an ounce as of 10:23 a.m. in Singapore, below its all-time high of $2,685.58 reached last week. The Bloomberg Dollar Spot Index fell 0.1 per cent. Silver was lower, while platinum and palladium rose.