Gold surges on safe-haven flows amid US-Iran conflict

US-Israel strikes on Iran trigger risk-off sentiment

Over the weekend, the United States and Israel carried out joint strikes on Iran. The strikes resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.

Iran responded by launching attacks on US air bases in the region, fueling broad risk aversion in global markets and boosting demand for traditional safe-haven assets such as Gold and the US Dollar (USD).

The military action followed several rounds of high-level nuclear talks between Washington and Tehran last week. In a brief telephone interview with The New York Times on Sunday, US President Donald Trump said the military campaign could last “four weeks or less,” raising fears of a possible invasion and even regime change in Iran.

The conflict is also raising economic concerns, increasing fears of supply disruptions in the Strait of Hormuz. The key shipping route handles nearly 20% of global Oil shipments. Higher energy prices could add to inflation pressures and support Gold’s appeal as a store of value.

West Texas Intermediate (WTI) Crude Oil has climbed above $70 per barrel, its highest level since June 2025, and is trading about 6.65% up at the time of writing.

Elsewhere, uncertainty over US trade policy and sustained expectations of Federal Reserve (Fed) rate cuts later this year add another layer of support for Gold.

US NFP in focus this week as markets reassess Fed rate cut outlook

Beyond the war headlines, investor attention will also turn to the US economic calendar this week, which could shape expectations for the Fed’s monetary policy path. Recent economic data showed inflation remains sticky, prompting traders to scale back bets on near-term monetary policy easing.

Markets will watch the ISM Manufacturing Purchasing Managers' Index (PMI) later on Monday, followed by the ADP Employment Change and ISM Services PMI on Wednesday. The focus will then shift to the Nonfarm Payrolls (NFP) report on Friday, along with Retail Sales data.

Technical analysis: RSI, MACD signal strengthening upside momentum

On the daily chart, XAU/USD maintains a bullish bias in the near-term, with the price holding above both the 21-day and 50-day Simple Moving Averages (SMAs), which continue to slope higher and reflect sustained buying interest.

The Relative Strength Index (RSI) at 65 signals firm positive momentum without entering extreme overbought territory, while the Moving Average Convergence Divergence (MACD) line turns higher in positive territory, suggesting strengthening upside pressure after a recent consolidation phase.

The Average Directional Index (ADX) has stabilized near 20, indicating a maturing but still trending environment rather than an aggressive breakout phase.

On the upside, initial resistance stands near the recent high zone around $5,400-$5,500. A sustained break above this area could open the door toward the $5,598 all-time high as the next bullish objective.

On the downside, immediate support emerges near the rising 21-day SMA around $5,040. A failure to hold above this level could signal fading momentum and expose the $4,900 support area, followed by the 50-day SMA near $4,815.

(The technical analysis of this story was written with the help of an AI tool.)

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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