š„Although the international gold market is closed today, the smoke lingering over the Middle East has not dissipated. After 35 consecutive days, the U.S.-Iran conflict shows no signs of de-escalation; instead, it is evolving into a full-scale, region-wide escalation. From the Trump administration’s announcement that “intense strikes will continue for another 2 to 3 weeks,” to Iran’s full-scale retaliation, shipping lane blockades, and attacks on U.S. and Israeli strategic targets, this storm roiling global energy and financial markets is reshaping gold’s pricing logic and future trajectory. A market closure does not mean a pause in analysisāthis moment is a critical window to peer through the chaos and assess gold’s medium- and long-term trends.
ā Current Situation: All-Out Confrontation, Spreading Conflict
Latest developments disclosed this afternoon indicate that U.S.-Iran tensions have reached a white-hot pitch.
š Full-Scale Military Escalation
Yesterday, U.S. forces precisely destroyed the B1 Bridge near Tehranāa key Iranian transportation hubāinflicting severe infrastructure damage. Concurrently, the U.S. has deployed an additional 50,000 troops to the Middle East, planning a “decisive strike” on Iran’s oil hub, Kharg Island, targeting the country’s economic lifeline.
In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) launched its 91st round of military operations in the early hours today, firing missile barrages at Tel Aviv and Haifa in Israel, while targeting U.S. cloud computing centers and military bases in the Gulf region. The Houthi movement has launched synchronized attacks, creating a multi-front, all-out confrontation across the region.
ā Risk Aversion Dynamics
Theoretically, escalating geopolitical conflicts should boost safe-haven demand and benefit gold. However, the current market has displayed a distinctly “counterintuitive” pattern: the fiercer the conflict, the more gold has retreated from its high of $4,800. The core reason lies in a shift in safe-haven capital flows. Global capital is now favoring the U.S. dollar and U.S. Treasuriesāassets with stronger liquidity and yield potentialāover non-yielding gold. Additionally, markets have grown increasingly desensitized to localized conflicts; only a full-scale war or nuclear crisis would trigger a sustained gold rally, not isolated military strikes.
š„ Inflation-Interest Rate Transmission Mechanism
This is the most critical logical chain affecting gold today:
U.S.-Iran conflict ā Strait of Hormuz blockade ā Crude oil supply crisis ā Surge in oil prices (WTI above $112) ā Spike in global inflation expectations ā Complete reversal of Fed rate-cut expectations ā Rise in real interest rates ā Increased opportunity cost of holding gold ā Downward pressure on gold prices.
The Federal Reserve’s March meeting sent a strong hawkish signal, with markets fully ruling out rate cuts for the year and even debating the possibility of rate hikes. As a non-yielding asset, gold’s appeal has weakened sharply in a high-interest-rate environmentāthe fundamental driver behind its recent pullback from highs.
š De-Dollarization and Strategic Gold Purchases
Escalating conflict is accelerating the global “de-dollarization” process, forming the core long-term driver for gold’s rise. Iran has expanded local-currency settlement for oil trade with China and Russia; the UAE Central Bank has raised its gold reserves to 15% of foreign exchange holdings; and global central banks have been net buyers of gold for 16 consecutive months.
Every step the Middle East conflict spreads deepens global concerns over dollar credibility, continuously highlighting gold’s strategic value as the “ultimate currency.”