Gold prices surged to their highest level in almost two months on Friday, driven by a sharp increase in investor demand for safe-haven assets following Israel’s airstrikes on Iran. The strikes, which targeted Iranian nuclear and military facilities, have sharply escalated tensions across the region, prompting concerns of a broader conflict that could destabilize global markets.

As of 03:32 GMT, spot gold rose by 1.3% to $3,427.36 per ounce, reaching its highest since April 22. U.S. gold futures were up 1.4% at $3,448.70. The yellow metal has already gained more than 3.5% this week, reflecting heightened anxiety among investors seeking refuge from geopolitical risk.

The latest military developments have sparked fears of Iranian retaliation, with Israel declaring a state of emergency in anticipation of missile or drone attacks. A U.S. official told Reuters that American military forces in the region are preparing for a range of scenarios, including assisting with civilian evacuations if necessary. In this climate of uncertainty, gold has emerged as a preferred asset, its traditional role as a store of value reinforced by the intensifying crisis.

Tim Waterer, chief market analyst at KCM Trade, noted that the flare-up in hostilities has shifted investor focus away from trade talks and economic data. "This latest spike in hostilities in the Middle East has taken the focus off trade negotiations for now, with investors making a play towards safe-haven assets in response," Waterer said. He added that gold’s break above the key resistance level of $3,400 suggests the potential for further gains if the conflict escalates.

Meanwhile, economic data from the U.S. has added momentum to gold’s upward trend. New unemployment claims remained at an eight-month high last week, while producer prices in May showed slower growth, pointing to easing inflationary pressures. These factors support growing speculation that the Federal Reserve may begin cutting interest rates earlier than expected. Markets are now pricing in a 55 basis-point rate cut by the end of the year, with the first move potentially coming as soon as September.

Elsewhere in the precious metals market, silver slipped 0.4% to $36.24 per ounce, platinum dropped 1% to $1,283, and palladium edged down 0.5% to $1,050.74. Despite Friday’s declines, all three metals were on track to end the week with gains, buoyed by the overall flight to safety in response to geopolitical turmoil.

With the situation in the Middle East far from resolved, analysts suggest that gold could see continued support in the coming days as investors hedge against both political instability and market volatility.