Gold Breaks $5,400 as Middle East Conflict Boosts Safe Havens
Gold prices surged and briefly surpassed $5,400 per ounce on Monday (March 2), setting a new record as escalating conflicts in the Middle East triggered massive flows into safe-haven assets. The surge occurred as global markets shifted to safe-haven instruments amid rising geopolitical risks and cross-asset volatility.
Risk-off sentiment intensified after reports of a joint US-Israeli attack on Iran, followed by Tehran's retaliatory strikes. Markets also focused on the Strait of Hormuz, a strategic waterway that handles around 20% of global oil flows, so any disruption—even a potential closure—immediately increases energy risk premiums.
The sharp rise in oil fuels a new wave of inflation: higher energy costs have the potential to reduce production and logistics costs, keeping inflation expectations sticky. In such a scenario, gold tends to benefit as it is seen as a store of value when rising, while stock markets—especially risk-sensitive sectors—tend to be depressed.
On the supply side, OPEC+ reportedly agreed to a relatively modest output increase, but this measure is considered insufficient to reduce the risk premium if shipping disruptions in the Gulf continue. With geopolitical factors still dominant and the market heavily driven by headlines, investor focus remains on conflict developments and the smooth flow of energy—two variables that will determine whether the gold rally sustains or begins a profit-taking phase. (alg)
Source: Newsmaker.id
