Gold staged a sharp rebound on Friday, climbing back above the $4,500-an-ounce level as investors returned to safe-haven assets amid an intensifying Middle East conflict, renewed volatility across global markets, and fresh concern over inflation driven by surging oil prices.
The rally came after a bruising stretch for bullion. Gold had fallen sharply earlier in the week and, at one point, touched a four-month low near $4,098 before dip-buying emerged. By Friday afternoon, spot gold was trading around $4,492 an ounce, up more than 2.5% on the day, while U.S. gold futures settled near $4,492.5. In London, bullion briefly pushed through $4,500 at the 3 p.m. auction.
The move higher reflected a classic flight to safety, but this time the backdrop was more complicated than usual. While war risk, collapsing equities, and inflation fears would typically be strongly supportive of gold, the metal has also faced pressure from rising Treasury yields, a stronger dollar, and shifting expectations that central banks may keep interest rates higher for longer.
Investor appetite for gold was revived as the conflict between Israel and Iran, and the wider region, showed little sign of easing. Israeli warplanes reportedly bombed Beirut, Iranian missiles struck the Saudi capital, and the war’s economic fallout continued to ripple through energy and commodity markets.
Global stocks fell heavily again, with the S&P 500 down 6.7% from the end of February, just before the first U.S.-Israeli strikes on Tehran. Crude oil remained elevated above $100 and, in some reports, above $110 a barrel, amid concerns over shortages, panic fuel buying, and disruptions to shipping through the Strait of Hormuz, a route critical to nearly one-fifth of global crude and LNG flows.
The resulting inflation fears have become central to the gold story. Rising energy prices have prompted investors to reassess the outlook for monetary policy, with markets now pricing out the rate cuts once expected next year and increasingly considering the risk of further rate hikes. That has created a tension in gold: the same geopolitical and inflation shocks that make the metal attractive as a hedge are also driving bond yields higher, increasing the opportunity cost of holding a non-yielding asset.
Complicating the picture further was news that Turkey, one of the world’s largest official gold holders and a major central-bank buyer in recent years, had sold or swapped roughly 60 tonnes of gold in the first two weeks of the month to raise about $8 billion.
According to Bloomberg’s analysis of Turkey’s weekly reserve data, the transactions marked the sharpest drop in the Central Bank of the Republic of Turkey’s gold reserves since 2018, reducing official holdings to about 772 tonnes, the lowest in 13 months.
The development fueled market concern that higher oil prices, weaker foreign-exchange reserves, and rising defense costs could force more countries especially non-oil importers to liquidate or pledge gold to raise cash.HSBC precious metals analyst Jim Steel said last week that the strain from high oil prices on foreign-exchange holdings, along with geopolitical risk and defense spending, “may encourage further official sector selling.”
But some market participants argued the reaction was overdone. Bruce Ikemizu, head of the Japan Bullion Market Association, said much of Turkey’s reported reduction appeared to come from short-term gold swaps rather than outright sales.“In other words, it amounts to borrowing currency using gold as collateral for a fixed period,” he said. “The market reaction may have been excessive.”That distinction matters. A temporary swap does not necessarily imply a strategic retreat from gold as a reserve asset; instead, it suggests gold is being used precisely because it remains a trusted source of emergency liquidity.
Friday’s rebound highlighted a broader puzzle that has defined the market in recent weeks: why has gold not surged more decisively given the scale of the geopolitical crisis? Analysts point to three main headwinds. First, Treasury yields have risen sharply. According to Ryan McIntyre, senior managing partner at Sprott, the main thing that has changed for gold is the opportunity cost of holding it relative to bonds. With 10-year Treasury yields up 30 to 40 basis points since the conflict began, investors have found the dollar and government debt more attractive in the short term.
Second, the U.S. dollar has strengthened, making dollar-priced gold more expensive for buyers in other currencies. Third, broader market stress has prompted some investors to sell gold and precious-metals equities to raise liquidity or meet margin calls elsewhere. Wealth Club’s Susannah Streeter noted that even mining shares have been hit unusually hard in this bout of volatility. Antofagasta, for example, has seen its shares fall sharply since the conflict began. Still, many analysts argue that these are short-term pressures rather than a fundamental break in gold’s long-term bull case.
Despite the recent correction, several banks and market strategists remain constructive on gold. Commerzbank raised its year-end gold forecast to $5,000 an ounce from $4,900, arguing that the recent pullback is unlikely to last. The bank expects the Iran conflict to end in the spring and sees the Federal Reserve eventually resuming rate cuts later this year, reducing rates by about 75 basis points by mid-next year.
Daniel Pavilonis of RJO Futures said the recent selloff pushed gold below its 200-day moving average and created “an incredible time to buy gold.” He expects a gradual move higher in the coming weeks if the Iran crisis stabilizes.ICBC’s precious metals team also said that although gold has fallen about 15% this month on higher-for-longer rate expectations, long-term demand remains supported. The bank pointed to efforts by Hong Kong and Singapore to expand their roles as major bullion hubs for central banks, underscoring gold’s importance as a strategic reserve asset amid elevated global uncertainty.
McIntyre of Sprott makes a similar argument. In his view, the structural reasons for owning gold, fiscal strain, monetary expansion, and the deteriorating long-term outlook for government finances have not changed. If anything, they have intensified.“The government is going to have to likely print more money, in all the conceivable scenarios that we see,” he said. “And that, consequently, will be good for gold, and bad for holding bonds.”
One of the more striking features of the current market is that institutional investment in gold still appears relatively limited, despite years of strong performance.McIntyre argues this reflects a lack of internal expertise in commodities and a long period in which equities performed so well that institutions had little incentive to diversify. Many banks, pension funds, and endowments reduced commodity exposure after the 2015 downturn and never rebuilt the in-house knowledge needed to make proactive allocations.
He also suggested that some institutional attention may have gone instead to Bitcoin and digital assets. He recalled a meeting with a large European family office that had no exposure to gold or commodities at all but had committed hundreds of millions of dollars to Bitcoin. In his view, institutional money may not move seriously into gold until traditional equity-heavy portfolios stop delivering.“They will postpone it as long as they can,” he said, “until things like the S&P 500 stop working and go the other way.”If that shift does occur, it could become the next major source of demand for bullion.
Silver also rebounded on Friday, with spot prices rising toward $69.50 an ounce and futures gaining as well. Earlier in London trading, silver had climbed above $72 before easing back. Platinum and palladium also advanced.
But silver’s outlook remains more complicated than gold’s because of its large industrial-demand component. McIntyre said silver still benefits from an expected supply deficit this year its sixth in a row but economic uncertainty and rising yields are near-term negatives. If the Iran conflict weighs on global growth and manufacturing, industrial demand for silver could weaken. That means silver may struggle to outperform until gold itself resumes a clearer uptrend.“I would expect gold to lead it out,” McIntyre said.
Friday’s rebound showed that gold’s haven appeal is still very much alive. When war risk intensifies and equities tumble, buyers return. But unlike past geopolitical crises, bullion is now operating in a market dominated not only by fear, but by inflation shocks, elevated energy prices, and rising bond yields.
That combination has produced unusual price action: sharp rallies followed by heavy selling, even as the fundamental case for owning gold remains broadly intact. In the short term, traders are likely to remain focused on three variables: whether the Middle East conflict escalates further, whether oil stays above $100 a barrel, and whether central banks respond to inflation by turning more hawkish. If yields continue rising, gold may struggle to break decisively higher. But if inflation fears give way to concerns about growth, debt sustainability, or renewed monetary easing later this year, the gold case could strengthen again quickly. For now, the metal remains caught between two powerful forces: the immediate drag of higher rates and the longer-term attraction of being one of the few assets investors still trust in a world of war, inflation, and financial instability.