Gold began March on a strong note after the US and Israel carried out major strikes on Iran that killed Tehran’s Supreme leader Ayatollah Ali Khamenei. As geopolitical tensions continue to intensify and fears of economic instability gain ground, spot gold jumped 1.72% to $5,368.09 an ounce by 0010 GMT, reaching its highest level in more than four weeks. Meanwhile, US gold futures went even higher, soaring 2.58% to $5,382.60 per ounce.
The attacks prompted a new wave of Israeli strikes on Tehran on Sunday, followed by retaliatory missile barrages from Iran, stoking further instability in the Middle East and beyond.
“Unlike previous escalations in this conflict, there is fairly strong incentive here for both sides to continue to escalate potentially – and that runs the risk of leading to a pretty chaotic, uncertain and therefore volatile environment for more than just a few days … the dynamic for gold is pretty positive,” Kyle Rodda, senior financial market analyst at Capital.com told Reuters.
Bullion, long viewed as a safe-haven asset, has already reached successive record highs this year, reflecting widespread economic and political uncertainty. The current rally adds to a 64% increase in 2025, driven by central bank buying, strong inflows into exchange-traded funds, and expectations of US monetary policy easing.
Last week, major banks reinforced the prospect of higher prices. JP Morgan and Bank of America said gold could climb towards the $6,000 mark, with JP Morgan forecasting that combined central bank and investor demand may push prices to $6,300 an ounce by the end of 2026.
Economic data added to market caution, with US producer prices in January rising more than anticipated, suggesting inflation may intensify in the coming months, according to the agency. Investors are also monitoring key labour market reports this week, including the ADP employment report, weekly jobless claims, and the non-farm payrolls data.
Precious metals also recorded gains on Monday. Spot silver increased 1.68% to $95.35 an ounce following a monthly rise in February. Platinum rose 0.74% to $2,382.15 an ounce, while palladium edged up 0.25% to $1,790.60 an ounce.
Gold and diamond crunch looms for India
Amid the escalating conflict in the Middle East, India is bracing for potential shortages of gold and rough diamonds as supply routes through Dubai are disrupted. The Gulf hub, which serves as the country’s largest source of rough diamonds and second-biggest supplier of gold bars, plays a crucial role in the country’s bullion and gemstone trade.
India imports between 800 and 850 tons of gold each year, with as much as 50–60% passing through Dubai, according to ET. The city also supplies the majority of rough diamonds that feed India’s extensive polishing industry, making the disruption a significant concern for traders and manufacturers alike. As the airspace continues to be closed, experts have warned that delays could ripple across the domestic market, affecting both availability and prices of gold and polished diamonds.>
