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Spot gold surged to a one-month high above $5,400 on Monday as the Iran war drove a historic rush into hard assets, but gains faded sharply after traders began pricing in the one scenario the bulls don’t want: a Federal Reserve forced to hike rates into a stagflationary shock. The metal is up 23 percent this year and 85 percent over twelve months. Whether it reaches a new record depends less on Tehran than on what Jerome Powell does next.
What Happened on Monday
Gold opened with its biggest gap since late 2025. Spot bullion jumped from Friday’s close near $5,248 to test $5,419.60 during Asian and early European hours, according to Bloomberg, the highest level since late January when the metal hit its all-time record of $5,589. Futures briefly crossed $5,400. Then, like a spring stretched too far, the move snapped back. By midday in New York, spot had settled near $5,305 to $5,338, still up roughly 2 percent on the session but a long way from the morning’s panic highs. Bloomberg reported that bullion slipped as much as 0.3 percent before steadying about 1 percent higher at the close.
The pattern is worth understanding if you’re holding any gold exposure right now. The initial spike was pure haven demand. Coordinated US-Israeli strikes over the weekend, Iran’s retaliatory missile launches across the Gulf, and the effective closure of the Strait of Hormuz created the kind of geopolitical shock that sends every institutional allocator reaching for the same asset at the same time. But then something shifted. Oil had jumped 8 percent or more. And traders began running the numbers on what $80-plus Brent does to inflation, what persistent inflation does to Fed policy, and what a rate hike cycle does to a non-yielding metal that rose 64 percent in 2025 alone and is already up another 23 percent this year.
The Tug of War Inside the Price
Frank Monkam, head of cross-asset macro strategy at Buffalo Bayou Commodities, told Bloomberg that gold’s gains were capped as traders started factoring in higher inflation risks that could force the Fed and its global peers to raise rates. That’s the tension your positions are sitting inside right now. On one side, the biggest oil supply disruption since the 1970s is pouring gasoline on the haven bid. On the other, the same disruption is creating the inflation overshoot that historically kills gold rallies.
Edward Meir at Marex framed the trade with a Reuters roundup clarity that’s hard to improve on: expect a knee-jerk $200 per ounce spike, then a drift lower once the market decides whether oil flows will actually stay offline. Tai Wong, an independent precious metals trader, added that any selloff on the fact will find buyers fast because the picture in Iran won’t clear up for weeks or months. Ole Hansen at Saxo Bank expects fresh highs, given recent momentum and the structural backdrop.
JPMorgan’s commodities team, which flagged a 5 to 10 percent risk premium jump even before this weekend, targets $5,000 per ounce by the fourth quarter of 2026 in its base case, with $6,000 or higher a possibility if the conflict drags. Goldman Sachs raised its year-end 2026 forecast to $5,400 in January and estimates central banks will buy roughly 60 tonnes a month this year, according to TheStreet. That’s the bull case compressed into two numbers. The bear case is simpler: if Hormuz reopens inside a month, the war premium evaporates, and you’re left holding gold at a level where the YTD gain already triples its 30-year average annual return of roughly 8 percent.
The Structural Case That Doesn’t Need Bombs
Strip out the headlines and the structural story underneath gold hasn’t changed in three years. It’s gotten stronger. Central banks bought 863 tonnes in 2025 according to the World Gold Council, the fourth-largest annual haul on record. Poland led with 102 tonnes, lifting reserves to 550 tonnes and publicly targeting 700. China added 27 tonnes on official books, but the Council estimates that 57 percent of all central bank buying last year was unreported, which means actual accumulation was significantly higher than disclosed figures suggest.
Gold overtook US Treasuries as the world’s largest reserve asset by value in late 2025. That’s a sentence the market hasn’t fully digested yet. Global gold ETFs absorbed a record $89 billion in inflows last year, doubling total assets under management to $559 billion, with holdings reaching an all-time high of 4,025 tonnes, per the World Gold Council. The price shattered records 53 times in 2025. The SPDR Gold Trust alone crossed $180 billion in AUM during February.
The underlying drivers, de-dollarisation, deficit spending at $1.8 trillion annually in the US alone, and a broadening coalition of emerging market central banks diversifying away from dollar reserves, all predate the Iran conflict. The war just poured accelerant on a fire that was already burning. As the precious metals complex signalled weeks before the first strike, gold, silver, and platinum were all flashing the same structural bid.
Silver and the Dubai Problem
Silver staged one of its most violent sessions in recent memory. Spot briefly topped $96.40 on Monday before crashing as much as 7 percent intraday into the high $87s, then recovering toward $88 to $94 by the afternoon. The whipsaw reflected silver’s dual personality: haven metal on the way up, industrial commodity on the way down, as recession fears triggered by the oil shock hit manufacturing demand expectations.
There’s a logistical wrinkle that isn’t getting enough attention. Bloomberg reported that the UAE partially closed its airspace and suspended Dubai flights in response to Iranian retaliatory strikes. Dubai is a critical node in the global gold supply chain, routing bullion from London to buyers in China and India. Gold typically travels in the cargo holds of passenger aircraft on the busy London to Dubai route. One trader told Bloomberg that Monday was spent rerouting consignments originally scheduled through Dubai. A short disruption changes nothing. A prolonged one tightens physical availability into Asia at exactly the moment demand is surging.
What to Watch Now
February was gold’s seventh consecutive monthly gain, the longest winning streak since 1973, according to Bloomberg. The metal is up roughly 85 percent from a year ago. These aren’t normal numbers. They reflect a market repricing gold as something more than a crisis hedge, more like a core reserve asset in a world where sovereign creditworthiness is deteriorating and geopolitical risk is repricing in real time.
Short term, expect chop. Gold likely holds above $5,200 even if de-escalation headlines land. Silver stays the wild card: bigger upside if industrial demand holds through the shock, bigger drops if recession fears spike. Longer term, the market is pricing the same question it’s been pricing all year. If governments can’t stop spending, central banks can’t stop buying, and wars keep erupting in the world’s most strategically important waterway, where does gold go from here? JPMorgan’s pre-war base case was $5,000. Goldman says $5,400. Both numbers look conservative now. Your positioning should probably account for that.
