SYDNEY - Asian share markets looked to be heading into turbulence on Monday as a flare-up of tensions in the Middle East sent gold to its highest in almost 7 years while oil flirted with 4-month peaks.
The United States detected a heightened state of alert by Iran's missile forces, as President Donald Trump warned the US would strike back, "perhaps in a disproportionate manner," if Iran attacked any American person or target.
Iraq's parliament on Sunday recommended all foreign troops be ordered out of the country after the US killing of a top Iranian military commander and an Iraqi militia leader.
Spot gold surged 1.6 percent to $1,575.37 per ounce in jittery trade and reached its highest since April 2013.
Oil prices added to their gains on fears any conflict in the region could disrupt global supplies.
Brent crude futures rose $1.05 to $69.65 a barrel, while US crude climbed 94 cents to $63.99.
"The risk of further escalation has clearly gone up - given the direct attack on Iran, Iran's threat of retaliation and Trump's desire to look tough - posing the threat of higher oil prices," said Shane Oliver, chief economist at AMP Capital.
"Historically though oil prices need to double to pose a severe threat to global growth and we are long way from that."
MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.16 percent though most major indices were yet to open. Futures for Japan's Nikkei pointed to an opening fall of around 500 points.
E-Mini futures for the S&P 500 fell 0.4 percent in very choppy trade.
Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries down at 1.795 percent having fallen 10 basis points on Friday. Treasury futures gained 7 ticks.
In currency markets, the Japanese yen remained the favored safe harbor courtesy of Japan's massive holdings of foreign assets. Investors assume Japanese funds would repatriate their money during a true global crisis, pushing the yen higher.
Early Monday, the dollar had edged down to a 3-month trough of 107.81 yen, and risked a pullback all the way to 107.00. The euro likewise eased to 120.45 yen having hit a 3-week low.
The dollar was steadier against the other majors, with the euro being little changed at $1.1166. Against a basket of currencies, the dollar was holding at 96.852.