Gold at 7-year high; stocks up after losses
NEW YORK — Gold touched its highest price in nearly seven years Monday as investors sought safety amid worries that rising U.S.-Iran tensions could lead to war.
Stocks in Asia and Europe retreated as dollars flowed out of riskier investments, but the U.S. market shook off its morning losses to grind out a modest gain. After dropping 0.6 percent as soon as trading opened, the S&P 500 pushed steadily higher through the day and ended up recovering half its sharp loss from Friday.
The S&P 500 climbed 11.43 or 0.4 percent, to 3,246.28. The Dow Jones Industrial Average erased an early morning loss of 216 points en route to a gain of 68.50 points, or 0.2 percent, closing at 28,703.38. The Nasdaq composite rose 50.70 points, or 0.6 percent, to 9,071.46.
Caution has been seeping through markets since early Friday, when a U.S. drone strike killed Iranian Maj. Gen. Qassem Soleimani in Iraq. The U.S. and Iran have since talked up the threat of violence, which pushed up the price of gold as money flowed into investments seen as safer. Gold neared $1,591 per ounce during morning trading and reached its highest level since April 2013.
Gold settled at $1,566.20 per ounce, up $17, and it’s climbed more than $40 since before Soleimani’s killing.
Gold has historically performed well around past military conflicts, such as the two Persian Gulf wars and 9/11, even after taking into account interest rates and the dollar’s movements, according to Goldman Sachs commodities analysts.
“The escalation in the Middle East was both unexpected and unwelcome,” said Craig Erlam, senior market analyst at trading platpoints, form OANDA Europe. “Investors are now fully in defensive mode, hoping for the best but fearing the worst.”
U.S. stocks seemed set to fall a second straight day Monday, but gains for oil producers and big internet companies made up for drops by industrial companies and banks.
Oil prices have climbed in recent days because any potential violence in the Middle East could disrupt oil fields in the region. Benchmark U.S. crude oil rose 22 cents to settle at $63.27 per barrel, adding to big gains Friday. Brent crude, the international standard, rose 31 cents to $68.91 per barrel.
That helped drive energy stocks in the S&P 500 to a 0.8 percent gain, the second largest among the 11 sectors that make up the index. EOG Resources jumped 4.1 percent, Occidental Petroleum rose 3.3 percent and Halliburton gained 2.5 percent.
Healthy gains for Amazon, Apple, Facebook and Google’s parent company, Alphabet, also helped lift the market.
Besides waiting for the next step in the clash between the U.S. and Iran, several big economic reports are on the schedule this week that could move markets.