Gold Extends Gain as Mideast Tensions Escalate

Gold rose to around $5,360 per ounce on Tuesday, extending its rally to a fifth consecutive session, as increasing tensions in the Middle East reinforced safe-haven demand. On Monday, President Trump warned that the US would continue attacking Iran until it was no longer capable of posing a threat, signaling that the conflict could last for a month or “far longer.”  Meanwhile, Iran declared the Strait of Hormuz closed and threatened to target any vessels attempting to transit the critical energy corridor. The escalation in conflict drove oil prices sharply higher, intensifying concerns over inflationary pressures in the US. This, in turn, triggered a sell-off in Treasuries and reduced bets of further interest rate cuts by the Federal Reserve. Markets now see the next Fed rate cut likely around September, later than previously anticipated.

Gold held above $5,300 on Monday, paring earlier gains after spiking past 5,419 dollars as a dramatic "buy the dip" rally in US stocks drained the metal's safe-haven momentum. While the initial strikes on Iran triggered a flight to safety, the S&P 500 staged a massive midday comeback, turning positive as investors bet that the conflict would not escalate into a full closure of the Strait of Hormuz. Crude oil also eased from its session highs, cooling the immediate inflation fears that had driven gold's run. Strength in tech giants like Nvidia and Microsoft further signaled a return to riskier assets, while a jump in the ISM Manufacturing price index to 70.5 pushed bets for later in the year rate cuts, reinforcing the dollar's appeal. At the same time, surging Treasury yields capped bullion’s appeal further.

Gold surged past 5,400 dollars on Monday, testing record highs as a dramatic escalation in Middle East warfare ignited a massive flight to safety. The joint strikes by the US and Israel that killed Iran’s Supreme Leader have effectively closed the Strait of Hormuz, threatening 20% of the world's oil supply and sending crude oil surging. This spike in energy costs has revived fears of a fresh inflation wave, prompting investors to abandon currencies and stocks in favor of bullion. Gold is outperforming as a hedge against the risk of prolonged regional war and potential strikes on Saudi energy hubs like the Ras Tanura refinery. With OPEC+ providing only a small output hike that failed to calm the market, and major tech and banking stocks tumbling, gold’s role as the ultimate store of value is being reinforced. The metal has now extended its longest winning streak since 1973 as the world grapples with a locked trade chokepoint and rising global instability.