Gold and silver prices jumped more than 1percent on Monday as investors fled to safe-haven assets after an attack on Saudi oil facilities raised concerns over global energy supply and ratcheted tensions in the Middle East.
Spot gold jumped 1.27 percent to $1,507.40 per ounce while U.S. gold futures rose 0.83 percent to $1,512.1. The gold-backed SPDR Gold Trust exchange-traded fund was down 0.82 percent at $140.15, with 874.51 tonnes of gold in trust on Friday.
Like gold, silver is seen as a safe-haven investment but the metal is also used in the production of consumer electronics goods as well as in the industrial sector, such as solar panels. Spot silver gained 2.96 percent to $17.94 per ounce.
The moves came after Saudi Arabia on Saturday shut down half its oil production after a series of strikes hit the world’s largest oil processing facility. The attack was claimed by Yemen’s Houthi rebels and the Trump administration has blamed Iran.
That closure is set to affect almost 5.7 million barrels of crude production a day, according to Saudi Aramco. That’s about 5 percent of the world’s daily oil production. In August, Saudi Arabia produced 9.85 million barrels per day, according to the data from the U.S. Energy Information Administration.
The Kingdom’s energy minister said the attacks also led to a halt in gas production, which is set to reduce the supply of ethane and natural gas liquids by 50 percent.
U.S. crude and Brent prices jumped more than 9 percent each Monday morning during Asian hours.
The attack raised tensions in the Middle East after the United States blamed Tehran for the strikes, and called it an “unprecedented attack on world’s energy supply.” For his part, U.S. President Donald Trump said the U.S. is “locked and loaded,” but his administration is waiting on Riyadh to determine who launched the strikes before proceeding on a course of action. Iran has dismissed those allegations as “meaningless.”
Elsewhere, the U.S. Federal Open Market Committee is set to meet on Tuesday and Wednesday and markets expect the central bank to cut interest rates by a quarter point.
Global growth outlook remains subdued amid the ongoing trade war between the U.S. and China, which could potentially sustain demand for safe-haven assets. Chinese Premier Li Keqiang said in a recent interview that it is “very difficult” for the world’s second-largest economy to maintain a growth rate at 6 percent or more.