US-Iran Tensions Reignite Safe Haven Demand for Bullion

The United States' recent deepening involvement in the Iran-Israel conflict is stoking fresh concern across global markets, with geopolitical risk once again pushing investors toward traditional safe-haven assets like gold and silver.

In the past fortnight, reports have surfaced that US intelligence and military support to Israel has intensified, particularly in response to Iran's drone and missile activity. While Washington has yet to fully escalate to a direct military confrontation with Tehran, the growing entanglement has heightened fears of a broader regional conflict. If US assets or personnel come under direct threat—or if Iran retaliates in a more coordinated way—the situation could quickly deteriorate into a proxy war or worse.

Historically, bullion prices respond swiftly to geopolitical instability. Gold, in particular, tends to benefit from its status as a hedge against uncertainty, while silver—although more volatile—can follow suit when market nerves are frayed. Following previous flashpoints involving Iran, bullion prices have spiked sharply in the short term, driven by flight-to-safety capital flows.

In the short term, any escalation—such as a strike on Iranian infrastructure (which occurred over the weekend!) or a closure threat to the Strait of Hormuz—could see gold push higher as investors seek refuge. On the other hand, if diplomacy gains traction or tensions de-escalate, the rally could lose momentum.

Looking into the mid term, the outlook depends heavily on the duration and scale of US involvement. A prolonged standoff would likely underpin higher bullion prices, especially if oil supply chains or regional economies are disrupted. Conversely, a swift resolution could see gold consolidate or retreat from highs, though lingering inflationary pressures and central bank policy may still offer support.

For now, bullion remains tightly tied to the Middle East’s uncertain trajectory.