Influenced by the Iran incident, gold prices gapped up at the opening of the Asian market yesterday (2nd), according to a report from HSBC Global Research. It is believed that rising oil prices pushed up gold prices, with the premium on the Shanghai Gold Exchange turning positive and reaching USD10 per ounce.

From the broker's perspective, the strong risk aversion sentiment in the market is highly favorable for gold, and Chinese banks remain strong buyers. Meanwhile, the strengthening USD doesn't seem to have weakened the gold price surges, and silver prices have basically followed gold higher. News of Iran attacking neighboring Gulf countries and closing parts of the Strait of Hormuz has led to strong demand for gold, though limited for silver.

As oil prices eased, however, gold prices began to weaken. HSBC Global Research believes one of the key factors behind this was the surge in bond yields. The yield on the US 10-year Treasury note rose from 3.96% to 4.07%. The US dollar strengthened, but it may not be as detrimental to gold as it appears, because in a crisis environment, both the dollar and gold can rise simultaneously.

Overall, HSBC Global Research believes that gold has further room to rise, as the conflict may drag on, and US President Donald Trump has stated that he will spare no effort to achieve goals on the Iran issue regardless of how long the actions continue. In a strong oil price environment, gold prices may reach new highs.