Gold surges on safe-haven flows amid US-Iran war
LONDON (March 2) Gold (XAU/USD) opens the week with a bullish gap amid escalating geopolitical tensions in the Middle East, with the US-Iran war triggering a fresh wave of safe-haven demand. At the time of writing, XAU/USD trades around $5,386, marking its highest level in over one month.
US-Israel strikes on Iran trigger risk-off sentiment
Over the weekend, the United States and Israel carried out joint strikes on Iran. The strikes resulted in the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.
Iran responded by launching attacks on US air bases in the region, fueling broad risk aversion in global markets and boosting demand for traditional safe-haven assets such as Gold and the US Dollar (USD).
The military action followed several rounds of high-level nuclear talks between Washington and Tehran last week. In a brief telephone interview with The New York Times on Sunday, US President Donald Trump said the military campaign could last “four weeks or less,” raising fears of a possible invasion and even regime change in Iran.
The conflict is also raising economic concerns, increasing fears of supply disruptions in the Strait of Hormuz. The key shipping route handles nearly 20% of global Oil shipments. Higher energy prices could add to inflation pressures and support Gold’s appeal as a store of value.
West Texas Intermediate (WTI) Crude Oil has climbed above $70 per barrel, its highest level since June 2025, and is trading about 6.65% up at the time of writing.
Elsewhere, uncertainty over US trade policy and sustained expectations of Federal Reserve (Fed) rate cuts later this year add another layer of support for Gold.
US NFP in focus this week as markets reassess Fed rate cut outlook
Beyond the war headlines, investor attention will also turn to the US economic calendar this week, which could shape expectations for the Fed’s monetary policy path. Recent economic data showed inflation remains sticky, prompting traders to scale back bets on near-term monetary policy easing.
Markets will watch the ISM Manufacturing Purchasing Managers' Index (PMI) later on Monday, followed by the ADP Employment Change and ISM Services PMI on Wednesday. The focus will then shift to the Nonfarm Payrolls (NFP) report on Friday, along with Retail Sales data.
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