Gold rose on increased haven demand after tensions ramped up in the wake of the Hamas attack on Israel.

The precious metal gained as much as 1.2% Monday, as financial markets brace for headwinds and volatility from the shock attack by Gaza militants. Oil surged as the conflict threatened to inflame tensions in the Middle East, home to almost a third of global supply. The yen and dollar — both haven currencies — also strengthened.

While the sudden crisis in Israel has added a small premium to gold, bigger gains will only come if there is a much more substantial escalation across the region, David Lennox, analyst at Fat Prophets, said by phone from Sydney.

Read More: Hamas Attack Won’t Cause Gold Rally, Unless Oil Stops Flowing

Bullion started to rally on Friday after last week approaching its lowest level since March, when it was impacted by signals from the Federal Reserve that it would keep monetary policy tight, along with surging US bond yields that pressured non-interest bearing assets.

Gold’s gain on Monday comes even after US employment surged in September, bolstering the case for another interest-rate increase. At the weekend, Fed Governor Michelle Bowman said US inflation remains too high and added that further monetary tightening was likely needed. Higher rates are generally negative for bullion.

The brewing political crisis in Israel has triggered “panic demand for safe-haven buying in gold,” said Priyanka Sachdeva, senior market analyst at Phillip Nova Pte. Both US Treasury yields and the US dollar continue “an upward trajectory on the back of the resilience of the US economy and will continue to limit the upside in non-yielding, dollar-denominated bullion,” she said.

Spot gold rose 1% to $1,850.67 an ounce at 7:33 a.m. in London, after gaining 0.7% on Friday. The Bloomberg Dollar Spot Index edged up 0.2%. Silver, palladium and platinum also increased.

--With assistance from Martin Ritchie.