The United States blew up two cars at Baghdad International Airport on Friday, killing the head of Iran’s Revolutionary Guards Qasem Soleimani along with Iraqi military leaders and others.

Gold, silver, oil, the U.S. dollar all spiked higher on the news, while U.S. equity markets gave up roughly two-thirds of their gains recorded on Thursday 2 January, the first trading day of the year.

Initial reactions reflected views that Iran might quickly respond.

The US Iranian military dispute is asymmetrical. Iran is likely to respond, but the response may be delayed some time. Additionally, the response may not be directly against U.S. targets. Past Iranian responses to U.S. aggressive acts have been delayed and indirect, more typically attacking Israeli, Saudi, or other U.S. allies’ assets rather than directly attacking U.S. interests. This has been the pattern in the past, and we would expect it to repeat given the military imbalance and the fact that portions of the U.S. Republican leadership, Air Force, and other parts of the U.S. government have urged a nuclear-tipped bunker busting bomb aimed at Iran’s underground nuclear facilities since at least 2006.

The gold price rose from around $1,534 before the attack to as high as $1,554 on Friday in New York trading. Prices may remain high today and possibly into next week, testing $1,560, before subsiding back toward around $1,535 early next week.

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