By: Rania Gule, Senior Market Analyst at XS.com – MENA
The gold market is experiencing an exceptional surge, with prices breaking through the $5,300 per ounce level and approaching $5,375 in early Asian trading, following a previous jump to around $5,420. In my view, these moves are not merely a passing speculative wave but reflect a comprehensive repricing of geopolitical risks in light of the escalating tensions between the United States and Iran, with the potential for the conflict in the Middle East to broaden. When gold breaks historical highs in a short period, the key message the market sends is that precautionary demand outweighs all other considerations, including yield assessments and opportunity costs.
Statements by U.S. President Donald Trump about continuing operations until achieving American objectives have heightened market anxiety. From my perspective, the most dangerous aspect of these developments is not the military event itself but the prolonged uncertainty. Markets can absorb sudden shocks, but they react more strongly to open-ended conflicts lacking a clear timeline. Therefore, I believe that the geopolitical risk premium embedded in gold prices will not dissipate quickly but will remain priced in as long as the escalation rhetoric continues and the likelihood of reciprocal responses increases.
Another notable factor is the sharp rise in oil prices, which has revived inflation fears. The relationship here is complex: higher oil prices due to geopolitical risks boost demand for gold as a safe haven, but at the same time create inflationary pressures that could force the Federal Reserve to pause its monetary easing. Historically, gold has benefited from low interest rate environments, but the current situation is different; we are witnessing gold rising despite lower expectations for rate cuts. In my opinion, this confirms that the geopolitical factor temporarily outweighs the monetary factor, and investors prefer hedging against systemic risks even if the cost of holding a non-yielding metal rises.
Market expectations suggest that the Federal Reserve may keep interest rates unchanged until summer, while Trump has called for cuts. This divergence between political rhetoric and monetary policy deepens the uncertainty. In my view, any hawkish signal from Fed officials, such as John Williams or Neel Kashkari, could temporarily support the dollar and trigger a technical correction in gold. However, I see such a pullback, if it occurs, as limited unless there is a clear easing of geopolitical tensions. In other words, the current fundamental drivers supporting gold are not purely monetary but relate to global risk management.
Staying above the $5,300 level reflects strong buying interest and a readiness to defend this zone as a new support level. If inflows into gold funds and institutional hedges continue, we may see a retest of $5,450–$5,475 in the near term. Nevertheless, I caution against short-term over-optimism; fear-driven markets can reverse sharply if signs of sudden easing appear. Therefore, I expect high volatility in the coming sessions, with a general upward bias as long as political conditions remain largely unchanged.
Crucially, gold is no longer moving only as a traditional hedge but as a mirror of the global financial system’s state. In an environment where geopolitical risks intersect with inflationary pressures and monetary policy complexities, gold becomes a tool for reallocating risk within investment portfolios. From this perspective, I believe strategic investors will continue to increase their allocations to the yellow metal—not only as a hedge against war but also against potential monetary policy disarray if global economic pressures intensify.
That said, an alternative scenario of rapid de-escalation could reduce the risk premium. In such a case, gold might undergo profit-taking and fall below $5,200. However, I expect any decline to attract new buyers, especially amid ongoing uncertainty about inflation and interest rates. Thus, my view leans toward a continued medium-term uptrend, even if short-term technical corrections occur.
In conclusion, gold surpassing the $5,300 mark is not a fleeting event but signals a new phase in global risk pricing. As long as U.S.–Iran tensions persist and oil prices continue to stoke inflation fears, gold will remain supported by safe-haven flows. Sharp fluctuations may occur around Federal Reserve announcements, but the likely trend, in my estimation, remains upward, with potential targets above recent peaks if current conditions continue. In this opaque environment, gold, in my opinion, remains the clearest compass for gauging global market anxiety.