Key Points
- Regional markets track global rally amid geopolitical uncertainty
- Pakistani bullion rates surge in line with global benchmarks
- Analysts warn that prolonged conflict could keep prices elevated
- Outlook hinges on trajectory of Iran-US-Israel confrontation
ISLAMABAD: Gold prices surged in international and domestic markets after coordinated US-Israel strikes on Iran intensified geopolitical tensions, triggering a wave of safe-haven demand from investors wary of a widening conflict in the Middle East.
The rally reflects a classic flight to safety as equity markets fluctuate and oil prices spike amid fears that the confrontation between Tehran and the US-Israel alliance could escalate further, disrupting energy supplies and global trade routes.
International market reaction
In global trading, spot gold climbed by over two per cent in early sessions as investors shifted funds away from riskier assets. The surge followed reports of expanded military operations targeting Iranian missile infrastructure and prompt retaliation from Tehran.
Gold, widely regarded as a hedge against geopolitical turmoil and inflation, has already been on an upward trajectory this year, supported by sustained central bank purchases and expectations of policy easing by major economies.
The latest escalation has injected fresh momentum into the market. Spot gold was trading above $5,350 per ounce on Monday after US-Israel strikes on Iran rattled markets, with US gold futures near $5,380, underscoring strong safe-haven flows, according to Reuters.
Financial analysts said that heightened uncertainty surrounding the Middle East conflict has reinforced gold’s appeal as a store of value. Exchange-traded funds backed by bullion reported renewed inflows, reflecting strong institutional participation alongside retail demand.
Regional trends
Across Asia and the Gulf region, gold prices mirrored international gains.
Key trading centres recorded brisk activity in both physical and futures markets, as investors adopted a defensive stance amid mounting geopolitical risk.
In South Asia, bullion dealers reported increased demand for gold bars and coins, traditionally favoured during periods of instability. Volatility in regional equity markets further strengthened gold’s attraction as a comparatively stable asset.
Currency fluctuations also influenced regional pricing. Movements in the US dollar, shaped by investor reaction to the unfolding crisis, contributed to variations in local gold rates across emerging markets.
In key Asian and Gulf trading hubs, bullion echoed global gains, with gold futures up nearly 2 per cent amid risk-off sentiment as the Middle East conflict deepened.
Pakistani Market Impact
In Pakistan, domestic gold prices surged in line with global benchmarks. Bullion traders in major cities reported a notable rise in per tola and per 10-gram rates, driven primarily by international price movements and adjustments in the rupee-dollar exchange rate.
Market participants said retail investors showed renewed interest in gold purchases as a hedge against uncertainty. Traditionally, Pakistani households turn to bullion during periods of geopolitical stress, currency pressure or inflationary concern.
The rise in gold prices also pushed silver prices higher, reflecting the broader momentum in precious metals. However, jewellers cautioned that sustained high prices could dampen consumer demand for ornaments, particularly if purchasing power remains under strain.
Economic implications
The surge in gold comes at a delicate moment for global financial markets. Rising oil prices linked to the conflict could intensify inflationary pressures worldwide, complicating monetary policy decisions in major economies.
For Pakistan, elevated gold prices present mixed outcomes. Investors holding bullion stand to benefit from capital appreciation, yet higher import costs may widen the trade deficit, given the country’s reliance on imported gold. Increased demand for physical gold can also place indirect pressure on foreign exchange reserves.
Outlook
Market analysts say the outlook for gold will largely depend on how the Iran-US-Israel confrontation unfolds in the coming weeks. If hostilities expand or threaten critical shipping routes such as the Strait of Hormuz, safe-haven flows into gold could strengthen further, keeping prices elevated.
Conversely, any credible diplomatic initiative leading to de-escalation may ease risk sentiment and temper the rally. Investors are closely monitoring signals from major capitals, including Washington and regional powers, for indications of negotiation or further military escalation.
Some strategists argue that even if immediate tensions subside, structural factors such as central bank diversification away from the US dollar and persistent geopolitical fragmentation could sustain underlying support for gold prices.
In the near term, volatility is expected to remain high across commodity and currency markets. As uncertainty dominates investor sentiment, gold appears poised to retain its traditional role as a refuge during periods of geopolitical upheaval.
Keywords: gold prices, Pakistan bullion market, safe-haven demand, Iran conflict, US-Israel strikes, precious metals, global markets
