By Amanda Cooper and Saqib Iqbal Ahmed

LONDON/NEW YORK (Reuters) -Iran's attack on Israel has rekindled the allure of safe havens and oil prices have surged, but with no clarity yet on how the Middle East situation will evolve, investors are treading tentatively.

Their key question is whether Iran's strike marks an escalation, or is more of a one-off backlash at Israel.

Mohit Kumar, a strategist at Jefferies, called the reaction "guarded" as investors await Israel's response.

Israel has said there will be consequences after Iran fired a salvo of ballistic missiles in what Tehran said was a retaliation for the Israeli campaign against Hezbollah.

Classic safe-havens like gold, government bonds and the Swiss franc surged on Tuesday and were holding most of those gains on Wednesday, while oil traded above $75 a barrel.

"Geopolitics is impossible to trade and hence keeping a low risk profile would be a prudent strategy," Kumar said.

Past bouts of heightened geopolitical tension, such as Russia's invasion of Ukraine in 2022, resulted in sharp but short-lived market moves during which investors fled risky assets and piled in to havens such as gold and the dollar.

Global stocks edged lower on Wednesday, while government bonds gave up some gains.

Equities and other risky assets sold off in April, when a previous round of missiles fired by Iran at Israel - the first ever - were shot down with the help of the U.S. military and other allies. Israel responded with airstrikes, but wider escalation was averted and markets recovered those initial losses.

This time, investors' decisions may rest on Israel's response and whether the conflict with Iran escalates.

"It's not just about reacting to headlines, but positioning yourself for both immediate market volatility and long-term impacts," Saxo Bank head of FX strategy and global market strategy Charu Chanana said.

"Geopolitical risks are constant and your portfolio should be ready for them," she said.

Gold is already up nearly 30% this year, thanks in large part to a decline in the dollar in response to a slowing U.S. economy and the Federal Reserve's decision to deliver steep interest-rate cuts to ward off more weakness.

One specific concern for investors is oil prices, which have jumped 5.2% in two days, as the risk of supply disruptions from the Gulf region increases. A more protracted conflict could push up energy prices worldwide.

This, in turn, complicates the job of central bankers, who are now intent on lowering borrowing costs to insulate the global economy as it gradually slows, as inflation has subsided since the punishing highs of 2021.

"The main message from geopolitics is inflation hasn’t gone away," said Trevor Greetham, Royal London Asset Management head of multi asset.

Beyond tensions in the Middle East, there are several potential catalysts that could keep investors on edge, including the U.S. election in November and a key jobs report this week that will help shape the Fed's policy direction.

The Cboe Volatility Index, an options-based indicator of demand for protection from market swings, rose on Wednesday, but by just 0.6%, compared with Tuesday's 15% surge to a three-week high of 20.73.

"Although the VIX is edging higher it remains sufficiently just below 20 to suggest that markets - including the crude oil market - do not yet envision an all-out military scenario," said Quincy Krosby, chief global strategist at LPL Financial.

Either way, trading is likely to remain jittery.

"Markets ... are likely to display an incredibly high sensitivity to incoming geopolitical news flow in the coming hours," said Michael Brown, senior research strategist at Pepperstone.

(Additional reporting by Naomi Rovnik in London; Suzanne McGee, Bansari Mayur Kamdar, Lisa Pauline Mattackal and Lewis Krauskopf; Writing by Ira Iosebashvili and Amanda Cooper; Editing by Megan Davies, Matthew Lewis and Alexander Smith)