Markets jolt after U.S.–Israeli strikes on Iran – gold rises as investors seek safety

Joint U.S. and Israeli strikes on Iran over the weekend marked a major escalation in Middle East tensions, with multiple outlets reporting that Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the attacks.

As global markets reopened, the first and clearest signal was a familiar one: safe-haven demand. Spot gold climbed about 1% to around US$5,329/oz, after being up as much as ~2% earlier in the session, as investors reassessed risk and sought protection from further volatility.

Oil markets also reacted sharply. Brent crude briefly surged to the low-80s (US$/barrel) at the open as traders priced in the risk of supply disruption and renewed instability around the Strait of Hormuz, a critical global energy chokepoint..

Equities were softer in early trade, with risk assets and sectors exposed to fuel and travel costs (including airlines) coming under pressure, reflecting the broader “risk-off” mood that often accompanies sudden geopolitical shocks.

Market commentators were quick to frame gold’s move as a rational response to uncertainty. KCM Trade’s Tim Waterer said gold is likely to be in “higher demand than usual,” with investors looking for “the best place to park their funds.”

Tony Coleman, Managing Director of New Zealand Gold Merchants, said the renewed volatility is another reminder of why serious investors hold bullion as part of a long-term plan:

“When the world feels less predictable, investors don’t suddenly become ‘gold bugs’ – they become risk managers. Gold is the asset you own so you’re not forced to guess what happens next.”

Coleman added that the investor base is widening as uncertainty becomes more frequent and more global:

“We’re seeing a much broader group of people recognising that protecting wealth isn’t about timing the market, it’s about building resilience. Physical gold and silver are part of that foundation.”

And while day-to-day price moves make headlines, Coleman emphasised the bigger picture:

“Gold’s job isn’t to outperform everything in calm markets. It’s to hold its value when confidence gets tested – and right now, confidence is being tested.”

Why gold reacts first in geopolitical crises

Gold has historically acted as a hedge during periods of military conflict, currency instability and systemic financial stress. When investors cannot easily price political outcomes, they often rotate toward assets with no counterparty risk.

Unlike equities or bonds, physical bullion does not rely on corporate earnings, government policy or credit markets to maintain value. That structural independence is what typically drives immediate inflows during geopolitical shocks.

The Strait of Hormuz remains one of the world’s most strategically sensitive trade routes. Any threat to its stability raises energy inflation risks globally. Rising oil prices can, in turn, feed inflation expectations and complicate central bank policy paths – another dynamic that tends to support precious metals.

A wider pattern of volatility

This latest escalation adds to a growing list of global stress points over recent years:

• Prolonged regional conflicts
• Supply chain instability
• Persistent inflation pressures
• Central bank policy uncertainty
• Elevated sovereign debt levels

Markets are not reacting in isolation. They are reacting within an already fragile global environment.

For investors, that distinction matters.

Short-term spikes may settle. Structural uncertainty tends to linger.

The New Zealand investor perspective

For New Zealand investors, geopolitical shocks are rarely local, but their financial impact often is.

Gold is priced globally in US dollars, meaning movements can also interact with NZD currency fluctuations. In times of global stress, currency volatility can amplify or soften local bullion pricing.

Physical ownership remains a key differentiator. Unlike ETFs or paper exposure, direct bullion ownership removes third-party risk and provides tangible control over an asset that has maintained purchasing power through centuries of geopolitical upheaval.

Market outlook

While it is too early to determine whether this escalation becomes prolonged or contained, markets are signaling caution.

Gold’s initial move suggests investors are preparing for further uncertainty rather than assuming a rapid de-escalation.

History shows that in periods where geopolitical events intersect with energy markets, inflation expectations and fragile confidence, gold’s role shifts from speculative asset to strategic insurance.

Whether this proves to be a short-term reaction or the beginning of a longer volatility cycle will depend on diplomatic responses, regional stability and broader market sentiment in the days ahead.

For now, the message from markets is clear: when uncertainty rises, capital looks for stability.

Prepared by the NZGM Content team