Gold Near Record High as Middle East Tensions Spike After US Joins Israel in Iran Strikes

Gold prices edged higher in early Asian trading on Monday following a dramatic escalation in the Middle East. The US joined Israeli forces in launching airstrikes on Iran’s nuclear facilities over the weekend, raising fears of a wider regional conflict that could rattle global energy markets and push investors toward traditional safe-haven assets.

Spot gold rose as much as 0.8% before trimming gains, and was last seen trading up 0.2% at $3,375.04 an ounce as of 7:47 a.m. in Singapore.

This brings the precious metal within $125 of its all-time high reached in April. The Bloomberg Dollar Spot Index also ticked 0.1% higher.

Risk of Wider Conflict Fuels Haven Demand
The strikes, which reportedly hit three major Iranian nuclear sites, triggered a surge in demand for both the US dollar and gold, as markets braced for Iran’s response. Oil prices also spiked amid concerns that Tehran could retaliate by targeting energy infrastructure across the region or disrupting global shipping through the strategic Strait of Hormuz.
“The fear of a broader regional conflict in the Middle East, critical for global energy supplies, has driven a surge in demand for gold as investors seek to mitigate risk,” said Bas Kooijman, CEO of DHF Capital SA.

Gold has already rallied nearly 30% so far in 2025, powered by geopolitical tensions and expectations of looser monetary policy globally.

Inflation vs. Interest Rates: A Tug of War for Bullion
While the geopolitical crisis is boosting gold’s appeal, analysts warn that a sustained rise in energy prices could spark inflationary pressures, which may force central banks to delay or reduce interest rate cuts—an environment typically unfavorable for gold, which offers no yield.

“Gold’s trajectory will depend on how long this uncertainty persists and how inflationary pressures evolve,” said Kooijman, adding that the dual drivers of geopolitical fear and accommodative monetary policy will likely keep gold prices near record highs in the short term.

Read More - Oil Prices Surge Over 2% After US Strikes On Iran - Explained

Iran’s Calculated Silence Tempers Gains
Despite the US strikes, Iran has not yet retaliated with any major attacks, possibly opting for strategic restraint. Analysts suggest that Tehran may be hesitant to trigger a spike in oil prices that could alienate allies like China. Meanwhile, militia groups historically supported by Iran are either unwilling or unable to respond with force.
This measured stance, combined with gold's already lofty levels, may be capping further gains for now. Still, with the metal just $125 off its peak, the rally could resume if tensions worsen.

Elsewhere, silver inched higher, while platinum and palladium saw slight declines.

(With Inputs From Bloomberg)