Oil surges about 20%, world stocks slide Fed, BoJ meetings in focus later in the week Near-term support for gold sits around $1,500/oz - analyst (Updates throughout, adds comment, updates prices) By Brijesh Patel Sept 16 (Reuters) - Gold rose more than 1% on Monday after an attack on key oil facilities in Saudi Arabia inflamed worries over the stability of the Middle East, driving investors to seek refuge in assets seen as a haven from risk.
A 20% bounce in oil prices in response to the attack also raised concerns over a potential rise in inflationary pressures, against which gold is often perceived as a hedge.
Spot gold was up 1% at $1,503.70 per ounce as of 1008 GMT, while U.S. gold futures rose 0.8% to $1,511.50 per ounce.
"The reaction is driven by two factors - one is that people are treating gold as some sort of inflation hedge in this environment," said Julius Baer analyst Carsten Menke.
"The second and the most important factor is the increase in geopolitical tensions, (with) uncertainties related to this event," he added. "People are seeking shelter in the gold market." Yemen's Iran-aligned Houthi group claimed responsibility for the attack on two plants at the heart of Saudi Arabia's oil industry on Saturday, which knocked out more than half the kingdom's output.
U.S. President Donald Trump on Sunday said the United States was "locked and loaded" for a potential response to the attack after a senior official in his administration said Iran was to blame.
Gold is often used as a safe store of value during times of political and financial uncertainty.
While the attack sparked the biggest one-day rise in gold prices in nearly two weeks, an easing of tensions may lead to a swift retracement, analysts said.
"Near-term support for bullion sits around the psychological $1,500," MKS PAMP said in a note. "However the fluid nature of the Saudi Arabia situation may see gold test back toward $1,480 - $1,485 should there be no further escalation." The attacks sparked supply fears in the oil market, sending crude prices to four-month highs, while weak economic data from China sapped investors' appetite for riskier assets.
Central banks globally are facing increasing pressure to dole out monetary support for flagging economies as the U.S.-China trade dispute hurts trade and business sentiment.
Investors are looking forward to the outcome of the U.S.
Federal Reserve and Bank of Japan's policy meetings on Wednesday, for signals on their future policy path.
Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
Elsewhere, silver jumped 2.4% to $17.85 an ounce and platinum gained 0.9% to $957.10. Palladium rose 1.2% to $1,625.96.