Oil and gold reacted sharply on Friday to the US launching a missile strike at a Syrian airbase, sending shockwaves through global markets and raising concerns that the conflict could spread in the oil-rich region.

However, after an initial sharp increase, they reversed some of the steep moves later in the session after the release of weaker than expected monthly US employment figures.

The 98,000 increase in payrolls followed a 219,000 rise in February that was less than previously estimated, a US government report showed. Gold, which rose before the jobs report as the attack on Syria jolted financial markets, headed for the third weekly gain in four weeks. Futures broke through the 200-day moving average, indicating upward momentum, and are up about 10 per cent this year.

“We saw a further move higher on the disappointing payrolls number,” said Brad Yates, head of trading for Elemetal, one of the biggest US gold refiners. “You’ve got people doing safe-haven seeking. Gold broke through its 200-day moving average. That has some shorts covering and potentially a new leg higher.”

Oil futures in New York and London surged more than 2 per cent to the highest in a month.

“It seems today’s spike is just a knee-jerk reaction to the missile strike,” said Thomas Pugh, a commodities economist at Capital Economics. “Syria produces little oil itself so the spike probably reflects the risk of increased tensions between the US and Russia or Iran.” Oil had struggled to extend a rally beyond $51 a barrel as concern over surging US supplies countered optimism around a possible extension to production cuts led by the OPEC.

“The oil price spike may be temporary as long as the military action is contained and doesn’t spread into Iraq, as Syria is no longer a significant producer,” Nomura Holdings Inc said in a note.

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