The United States detected a heightened state of alert by Iran’s missile forces, as President Donald Trump warned the U.S. 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 U.S. killing of a top Iranian military commander and an Iraqi militia leader.

Spot gold XAU= surged 1.5% to $1,579.55 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. [O/R]

Brent crude LCOc1 futures rose $1.46 to $70.06 a barrel, while U.S. crude CLc1 climbed $1.17 to $64.22.

“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 .MIAPJ0000PUS slipped 0.7%.

Japan's Nikkei .N225 slid almost 2% in a sour return from holiday, while E-Mini futures for the S&P 500 ESc1 fell 0.5% in very choppy trade.

Chinese shares opened in the red too, with the blue-chip CSI300 index .CSI300 off a shade while Australian shares were off 0.4%.

“Geopolitical tensions look like remaining elevated in coming days, so lending support to oil prices and keeping risk asset markets on the defensive,” said Ray Attrill, head of FX strategy at National Australia Bank.

Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries US10YT=RR down at 1.769% having fallen 10 basis points on Friday. Treasury futures TYc1 gained 5-1/2 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.

On Monday, the dollar was last at 107.98 yen JPY=, after falling to a three-month trough of 107.78 earlier in the session. The euro likewise eased to 120.55 yen EURJPY= having hit a three-week low.

The dollar was steadier against the other majors, with the euro little changed at $1.1161 EUR=. Against a basket of currencies, the dollar was holding at 96.86 .DXY.

The risk sensitive currencies of Australia AUD=D3 and New Zealand NZD=D3 were on track for their fourth straight session of losses. [AUD/]