Gold Prices Expected to Surge as Middle East Tensions Escalate

Financial experts predict gold prices could spike significantly when markets open Monday following military strikes in Iran. Analysts say investors are rushing to precious metals as a safe haven amid growing Middle East uncertainty.

Financial markets are bracing for major volatility as investors turn to gold and other precious metals following recent military strikes involving the United States and Israel against Iran. Market experts are predicting substantial price movements when trading resumes Monday.

Edward Meir, an analyst at Marex, anticipates immediate market reactions across commodity sectors.

“I think you’re going to see a knee jerk spike up in most commodity markets, including gold and oil. This will be a natural response to the outbreak of hostilities, which was rather unexpected in terms of scale and scope,” Meir said.

He projects gold could jump approximately $200 per ounce initially, though expects prices may decline throughout the trading day. “The markets are rather dispassionate when it comes to military conflicts; the only thing investors are ultimately focused on is whether the oil flows will be interrupted so once the initial spike is over, the initial rally tends to fade,” Meir explained.

Digital gold trading is already showing signs of increased demand during the weekend closure of traditional exchanges. Hugo Pascal, a precious metals trader at InProved, noted that tokenized gold is currently commanding premium prices.

“With traditional exchanges closed, tokenised gold is currently trading at a premium, signalling a bullish ‘flight to safety’ ahead of the week’s open. Our digital proxies are showing a strong weekend bid,” Pascal said.

He reported that “PAX Gold (PAXG) is currently leading the charge at $5,344/oz (+2.2% since Friday), while Tether Gold (XAUt) has climbed to $5,292/oz (+1.2%).”

However, Pascal cautioned that “weekend proxy premiums often overstate the initial gap but accurately reflect the direction.”

Tim Waterer, chief market analyst at KCM Trade, expects heightened gold demand due to multiple risk factors.

“Gold is likely to be in higher demand than usual when markets open on Monday. Given the risks regarding how long the conflict may last, which other nations could be dragged in, and inflation fears, gold is expected to assume its mantle as the safe haven asset of choice,” Waterer said.

“Stock markets and other risk assets will probably be sold off and investors will be looking for the best place to park their funds, and gold will likely be atop that list,” he added.

Fawad Razaqzada from City Index and Forex.com sees potential for new record highs in gold pricing.

“There will be extra haven demand for gold which could see prices rise to around $5,500 again, and possibly a new record high above January’s peak of around $5,600,” Razaqzada said.

“However, gold’s gains beyond that level could be capped by a potential rebound in the U.S. dollar, especially if crude oil stays sharply higher,” he noted.

Independent metals trader Tai Wong suggests the market response may be mixed initially.

“I think gold and silver could sell off ‘on the fact’ on the open but any significant sell off will find buyers as the picture in Iran will unlikely be clear for weeks to months,” Wong said.

“I think a U.S. attack has been priced in but the timing was a bit uncertain. It’s certainly in the oil market. And the fact that crypto is higher might be a harbinger,” he added.

ANZ analyst Soni Kumari expects positive price movement with possible pullbacks depending on developments.

“Tomorrow, the price reaction will be positive initially, though there could be some retracement later in the session depending on how events unfold,” Kumari said.

“Our overall view has not changed, we remain positive on gold … Geopolitics has been very different this year, with tensions more intense, and after this attack there could also be macro implications, especially if oil prices rise sharply,” she explained.

Joshua Rotbart, founder and managing partner at J. Rotbart & Co, predicts increased volatility in precious metals markets.

“It is safe to assume that precious metals will experience enhanced volatility with upward movement,” Rotbart said.

“As the risk of a war with Iran was somewhat priced in the rally gold price had already, the extent of the movement will depend on the effect the conflict will have on the energy market, and on whether regime change in Iran is within reach,” he added.

Ole Hansen, head of commodity strategy at Saxo Bank, expressed concern about the escalating situation and its market implications.

“There is no doubt this is a worrying escalation and one that will drive investors into precious metals and the energy sector. How big the impact will be is anyone’s guess but given last week’s momentum I would not be surprised if gold prints a fresh record high,” Hansen concluded.