Australia's trade surplus narrowed in January as exports shrank while imports rebounded.

The seasonally adjusted balance on goods dropped to AU$2.63 billion from of AU$3.37 billion a month ago, according to Thursday data from the Australian Bureau of Statistics.

Exports slipped 0.9%, while imports rose 0.8%.

The 5.2% slump in rural goods, such as meat, cereals and sheepskins, was a key driver to the drop in exports, with other rural products dipping 10.2% from a month earlier. Non-rural goods exports, which slid 1.7%, also contributed to weak exports, especially metals, coal, machinery and other products, such as sugar and beverages.

Meanwhile, non-monetary gold was a major driver in raising imports, jumping 46.8% month on month.

"Sharp fluctuations in gold values, both for exports and imports, continue to drive most of the month-to-month volatility. Excluding gold, the goods trade balance was nearly unchanged from December, hovering around zero," Westpac senior economist Mantas Vanagas said.

In a note from the ANZ, economists Aaron Luk and Sophia Angala and senior economist Adelaide Timbrell suggested that the global tensions have been a factor in an increase for demand for gold.

"The rise in gold trade likely reflects a rise in gold prices in January, as heightened geopolitical uncertainty supported safe-haven demand for gold."

The conflict in the Middle East is expected to further affect Australia's trade, particularly oil and coal.

Iran closed the Strait of Hormuz, a critical choke point for oil trade, after joint U.S. and Israeli forces launched missile attacks on Tehran days ago.

The ongoing war will bring oil prices higher and may possibly dwindle global oil supplies.

Australia's imports of crude and refined petroleum account for only about 11% of total goods imports, Vanagas said, but the bigger effect will be on coal and liquefied natural gas or LNG.

"If LNG supply from major Middle Eastern exporters remains restricted, this could be an opportunity for Australia's LNG exports. However, it will be limited by capacity constraints and supply shortages," Vanagas said.