Gold opened March with a sharp rally after the United States and Israel launched major strikes on Iran that reportedly killed Tehran’s Supreme Leader, Ayatollah Ali Khamenei. As geopolitical tensions deepened and fears of broader economic instability mounted, investors rushed toward safe-haven assets.
Spot gold climbed 1.72% to $5,368.09 an ounce by 0010 GMT, marking its highest level in more than four weeks. US gold futures rose even more sharply, gaining 2.58% to $5,382.60 per ounce.
The initial strikes were followed by fresh Israeli attacks on Tehran on Sunday and retaliatory missile barrages from Iran, intensifying uncertainty across the Middle East and global markets.
Kyle Rodda, senior financial market analyst at Capital.com, told Reuters that the current escalation differs from earlier flare-ups. “There is fairly strong incentive here for both sides to continue to escalate, potentially leading to a chaotic, uncertain and volatile environment for more than just a few days,” he said, adding that the outlook for gold remains positive under such conditions.
Safe-Haven Rally Extends
Bullion, traditionally viewed as a hedge against uncertainty, has already hit successive record highs this year. The latest surge adds to an impressive 64% gain in 2025, driven by sustained central bank purchases, strong inflows into gold-backed exchange-traded funds, and expectations of easing US monetary policy.
Major financial institutions have reinforced the bullish outlook. JPMorgan Chase and Bank of America recently projected that gold could approach the $6,000 mark. JPMorgan has forecast that combined central bank and investor demand could potentially push prices to $6,300 per ounce by the end of 2026.
Economic indicators have further strengthened gold’s appeal. US producer prices in January rose more than expected, signalling persistent inflationary pressures. Investors are now closely tracking upcoming labour market data, including the ADP employment report, weekly jobless claims, and non-farm payroll figures, for further cues on monetary policy.
Other precious metals also advanced. Spot silver gained 1.68% to $95.35 an ounce after posting a monthly increase in February. Platinum rose 0.74% to $2,382.15 an ounce, while palladium edged up 0.25% to $1,790.60.
As tensions escalate, India is preparing for potential disruptions in gold and rough diamond supplies, particularly due to the strategic importance of Dubai in the global bullion and gemstone trade.
Dubai serves as India’s second-largest supplier of gold bars and its biggest source of rough diamonds. The Gulf trading hub plays a central role in feeding India’s vast jewellery and diamond-polishing industry.
India imports between 800 and 850 tonnes of gold annually, with an estimated 50–60% routed through Dubai. The city also supplies a majority of the rough diamonds processed by India’s cutting and polishing sector, which exports finished gems worldwide.
With airspace closures and flight suspensions affecting cargo movement across the Gulf, industry experts warn that shipment delays could ripple through domestic markets. Disruptions may impact the availability of gold bars and rough stones, potentially driving up prices of both bullion and polished diamonds in India.
Traders and manufacturers are closely monitoring logistics channels, as prolonged instability could squeeze inventories and increase financing and insurance costs. If the conflict persists, the pressure on supply chains may intensify, affecting not just jewellery retailers but also India’s export-driven diamond industry.
For now, markets remain on edge — with gold benefiting from uncertainty, while India’s bullion and gemstone sectors brace for possible turbulence in the weeks ahead.
