Israel-Iran Conflict Update: Will it Stem the Gold Rally or Further Boost It?

Gold is finding flying feet amid the fresh Israel-Iran conflict update with investors all over hedging the yellow metal as a safety measure in today‘s uncertain times. The Russia-Ukraine War, which began in 2022, is still on, which added huge momentum to the upward movement in gold prices over three years. The latest outbreak between Israel and Iran has only added to the ongoing gold rally. Israel launched airstrikes on Iran’s nuclear facilities, killing many of the latters military officials and top nuclear scientists. Responding to the attack, Iran threw missiles and drones into several Israeli cities.

The Israel-Iran conflict update took a dramatic turn with the US exploding three Iranian nuclear sites - Isfahan, Natanz and Fordo in a calibrated military exercise. President Donald Trump warned Iran of even more severe attacks if it does not initiate peace talks with Israel. The latest conflict between Israel and Iran with the US attack has made the matter complicated for economies worldwide and gold in particular. Lets find out.

Gold Prices Surge in Overseas Spot, Domestic Futures Market

The Israel Iran conflict background may be as old as 46 years when it first began and worsened in 1991 following the Iranian revolution. However, the conflict affects gold prices in both overseas and domestic futures markets. Overseas gold spot price neared an all-time peak of $3,451 per ounce last week. Domestic gold future prices spiraled to INR 99,929 per ten 10 grams. The MCX gold price today remains at a lower but solid value of INR 99,250. The spike shows how anxious investors have become in the age of worsening geopolitical climate globally. People have resorted to gold to hedge geopolitical risks previously. And the current crisis is no different.

Gold Price Surge Following Israel-Iran Conflict Seems to Have Settled Now

While gold prices surged immensely following the fresh Israel Iran conflict update, the market seemed to have factored in the crisis. Theres no sharp movement. So, prices may remain stable. Some experts, however, think that gold has already achieved a peak with its prices having doubled over three years. So, there will be no surprises if there comes a correction to the tune of 30% over the next year.

Gold Price Rise Anticipated Following Some Macroeconomic Indicators

The US inflation data, represented by the Consumer Price Index (CPI), rose by just 0.1% in May 2025, enhancing expectations of interest rate cuts by the Federal Reserve by as early as September this year. Lower interest rates decrease the opportunity cost of holding non-yielding investments such as gold. This makes gold even more attractive for investors. Central banks, especially of China and Russia, have continued to buy physical gold to diversify their holdings from the US dollar alone. This has led to a 29% rise in gold prices so far in 2025.

Conclusion

Its still not clear whether the Israel-Iran conflict news will add more momentum to the gold price in India and globally. No major movements were witnessed. However, as the US stepped into the war and added to the update on Israel and Iran conflict, the crisis may deepen, causing more anxiety for investors and making them continue to hedge risks with gold. Also, as gold prices in India have already peaked, expectations of major price hikes across spot and futures markets are lower, at least in the short to medium term.