Global gold prices climbed sharply over the past week, fuelled by rising geopolitical tensions following military exchanges between Iran and Israel. The renewed conflict prompted a flight to safe-haven assets, driving gold to its highest level in two months.
According to Gold Bullion, the price of gold rose by 3.7% during the week, reaching a peak of $3,446 per ounce—its highest since April. The metal opened the week at $3,317 and closed at $3,432 per ounce, with Friday’s trading pushing it close to its all-time high of $3,500 recorded in April.
The surge followed a significant escalation in the Middle East. In the early hours of Friday, Israel launched a series of strikes on Iranian territory, targeting suspected nuclear facilities, missile factories, and senior military officials. The move, which Israel described as a pre-emptive measure to halt Iran’s nuclear ambitions, marked a serious escalation.
Iran responded swiftly with missile attacks on areas in Tel Aviv, raising fears of a prolonged conflict. The tit-for-tat strikes heightened global uncertainty, reinforcing gold’s role as a primary safe-haven asset.
The precious metal also broke out of the sideways trading pattern that had characterised recent weeks, decisively surpassing the $3,400 level and maintaining upward momentum.
Simultaneously, global crude oil prices spiked to their highest levels in six months amid concerns that the conflict could disrupt energy supplies. Iran has previously threatened to close the Strait of Hormuz, a key maritime route through which nearly 20% of global oil shipments pass.
The surge in oil prices has raised concerns over a new wave of inflation, driven by rising energy and fuel costs. This, in turn, is likely to further boost demand for gold as a hedge against inflation, especially with the US dollar hovering near multi-month lows.
Adding to the bullish sentiment, recent US economic data revealed a decline in inflation alongside a rise in jobless claims, fuelling expectations that the Federal Reserve may move to cut interest rates later this year.
