Gold surged in early Asian trading, driven by reports that Iran fired missiles at two Iraqi military bases where U.S. forces are stationed. The yellow metal charged above $1600 for the first time since April 2013 before easing modestly from the 1611.41 high.

President Trump had previously threatened to retaliate "quickly and fully" should Iran strike "any U.S. person or target." Now that U.S. targets have been struck, it seems the U.S. military is going to have to hit back.

The President tweeted in response to the Iranian action:

"All is well! Missiles launched from Iran at two military bases located in Iraq. Assessment of casualties & damages taking place now. So far, so good! We have the most powerful and well equipped military anywhere in the world, by far! I will be making a statement tomorrow morning." - President Donald Trump

This suggests the U.S. military is unlikely to respond before the President's statement. That may explain the pullback from the highs.

However, the U.S. is not going to shrug this off. Trump said several days ago that 52 Iranian sites had been pre-targeted, including cultural sites.

We'll see what Wednesday brings, but risk-off sentiment is going to keep gold underpinned for some time to come. The 1625.93 Fibonacci level remains the next upside target. The previous high at 1557.06 marks the first tier of significant support and I'm thinking it should remain protected.

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