Gold prices rose in Asian trade on Monday and were in sight of record highs as demand for safe havens was boosted by Iran’s attack on Israel, although strength in the dollar limited major gains in the yellow metal.

Markets were also waiting to see just how Israel would respond to Iran’s strike, given that the attack caused limited damage, and that Tehran also said the move concluded its offensive against Israel. This helped limit some safe haven demand.

Spot gold rose 0.6% to $2,357.81 an ounce after hitting a record high of $2,372.62 an ounce over the weekend, while June gold futures steadied at $2,373.0 an ounce after hitting a record high of $2,389.0 an ounce. 

Safe haven demand underpins gold prices

The biggest point of support for gold prices was a drone and missile strike by Iran against Israel over the weekend, in supposed retaliation for an attack on an Iranian embassy in Syria.

The move marked the potential entry of Iran into the long-running Israel-Hamas war, and presented the possibility of a greater conflict in the Middle East, which could also draw in the U.S..

But the Iranian strike appeared to have caused limited damage in Israel. Israeli ministers also reportedly said that they had no plans to immediately retaliate over the attack. 

The U.S. also appeared to be making attempts to deescalate the situation, stating that it will not engage in any retaliatory action against Iran.

This notion, coupled with recent strength in the dollar, put a cap on greater gains in gold. The yellow metal’s outlook was also somewhat muddied by the prospect of higher-for-longer U.S. interest rates, following hotter-than-expected inflation readings last week. 

Other precious metals retreated on Monday. Platinum futures fell 0.7% to $985.05 an ounce, while silver futures fell 0.3% to $28.258 an ounce. 

Copper prices mixed after weak China data, aluminum rallies 

Among industrial metals, copper prices were a mixed bag on Monday amid pressure from a stronger dollar, as well as weak economic signals from top importer China.

Three-month copper futures on the London Metal Exchange rose 0.4% to $9,457.0 a ton, while one-month U.S. copper futures fell 0.6% to $4.2888 a pound.

Both contracts remained close to 15-month highs, on expectations of tighter supplies as several major Chinese refiners signaled supply cuts. Russian copper exports were also slapped with new sanctions by the U.S. and UK. 

But this optimism was somewhat dulled by weak inflation and trade readings from China last week, which showed that economic growth in the world’s biggest copper importer remained weak.

Meanwhile, aluminum prices rallied on Monday on the prospect of tighter supplies, as the U.S. and UK placed new sanctions on Russia over its invasion of Ukraine.