Gold Hits Two-Month High as Middle East Tensions Escalate and Fed Decision Looms
Gold extended its winning streak to a fourth straight session on Monday, climbing to its highest level since April as the Israel-Iran conflict escalated and investors piled into safe-haven assets ahead of a high-stakes U.S. Federal Reserve meeting.
At 0246 GMT, spot gold was trading at $3,442.09 per ounce, up 0.3%, while U.S. gold futures also rose 0.3% to $3,461.90. Earlier in the session, prices briefly touched levels last seen on April 22.
“It’s the joint political risk premium that’s rising due to the Iran-Israel conflict that is boosting safe-haven demand for gold,” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.
Key Precious Metals Snapshot (as of early Monday):
-
Gold (Spot): $3,442.09 (+0.3%)
-
Gold Futures (U.S.): $3,461.90 (+0.3%)
-
Silver: $36.29 (flat)
-
Platinum: $1,233.87 (+0.4%)
-
Palladium: $1,040.96 (+1.3%)
Israel-Iran Conflict Sparks Safe-Haven Rush
The rally in gold comes on the back of renewed hostilities between Israel and Iran, with both countries launching fresh strikes over the weekend. Civilian casualties were reported on both sides, and military leaders have issued warnings of further escalations.
This rising geopolitical risk has fueled a classic flight to safety, with investors diverting capital into gold, which traditionally performs well during times of geopolitical and economic uncertainty.
“We have a clear break above $3,400 right now and the short-term uptrend is intact,” Wong added. “We are seeing resistance at $3,500 with the possibility of breaking new highs.”
Eyes on the Fed: Will Rate Cuts Follow?
While conflict headlines dominate news cycles, markets are equally focused on the U.S. Federal Reserve’s policy meeting this Wednesday. The central bank is widely expected to leave interest rates unchanged, but investors are closely watching for signals on future easing.
Recent inflation data came in lower than expected, prompting futures markets to price in two rate cuts by the end of the year, with the first potentially arriving in September.
Lower interest rates typically benefit gold, as they reduce the opportunity cost of holding the non-yielding asset. The Fed’s tone and updated economic projections will be critical in determining whether gold can break decisively above $3,500.
Broader Precious Metals Market Reflects Risk-Off Mood
Other precious metals also posted gains, although more modest than gold:
-
Platinum rose 0.4% as industrial demand outlook brightened slightly.
-
Palladium climbed 1.3%, signaling strength in auto-catalyst demand and investor hedging.
-
Silver, which has a dual role as both a precious and industrial metal, held steady at $36.29 per ounce.
These moves suggest that investors are positioning not only for geopolitical shocks but also for a broader easing cycle across global central banks, especially with interest rate decisions due this week from the Bank of Japan, Bank of England, and Sweden’s Riksbank.
Conclusion: Gold’s Rally May Just Be Getting Started
With the Middle East crisis intensifying, the Federal Reserve poised to shape global monetary direction, and inflation cooling, the environment for gold appears increasingly supportive.
A sustained break above $3,500 could open the door to new all-time highs, particularly if geopolitical flashpoints expand or central banks turn more dovish than anticipated.
For now, investors are staying defensive — and gold is back in the spotlight.
