Gold prices are on track to record their first weekly gain since the outbreak of the US–Israel conflict with Iran, as renewed bargain-hunting emerges following weeks of heavy selling pressure.
The precious metal rallied strongly into the end of the week, climbing more than 4% at its peak to push back above the $4,550 per ounce level. This rebound marks a notable shift after gold had been under sustained pressure, driven largely by surging oil prices and a stronger US dollar—factors that have fuelled inflation concerns and reinforced expectations of tighter monetary policy from the Federal Reserve. As a non-yielding asset, gold typically struggles in such an environment.
A Fragile Recovery Amid Geopolitical Tensions
Despite the late-week surge, the broader outlook remains uncertain. The ongoing conflict in the Middle East continues to inject volatility into global markets. Escalating military actions between the US, Israel, and Iran have disrupted key infrastructure and trade routes, most notably the Strait of Hormuz—through which a significant portion of the world’s energy supply flows.
Oil prices have remained elevated as a result, intensifying fears of prolonged inflation and raising the spectre of stagflation—a challenging economic environment characterised by slow growth and rising prices.
Since the conflict began in late February, gold has fallen nearly 15%, at times behaving more like a risk asset than a traditional safe haven. This shift reflects broader market dynamics, where liquidity pressures and macroeconomic uncertainty have driven investors toward cash and the US dollar.
Central Bank Activity Adds Pressure
Further weighing on sentiment is a shift in central bank behaviour. Recent data revealed that Turkey’s central bank sold or swapped approximately 60 tonnes of gold over a two-week period—equivalent to more than $8 billion. This move has raised concerns that other nations, particularly those facing economic strain from rising energy costs, may follow suit.
For the past several years, strong central bank buying has been a key pillar supporting gold’s rally. Any reversal of this trend could significantly alter the long-term demand outlook.
Analysts suggest that economic disruption across energy-importing nations may force central banks to liquidate reserves to meet US dollar obligations, temporarily weakening gold demand at the institutional level.
Signs of a Technical Bottom
Encouragingly, gold appears to have found solid support near the $4,100 level earlier in the week, sparking a sharp rebound. Prices have since reclaimed the $4,500 range, signalling the possibility of a short-term bottom forming.
Market analysts note that while it is too early to confirm a sustained bullish trend, the recent price action suggests that gold’s traditional safe-haven appeal may be beginning to re-emerge.
However, risks remain elevated. Continued strength in oil and the US dollar, combined with geopolitical uncertainty and potential central bank selling, could cap further upside in the near term.
Stagflation: A Bullish Catalyst?
Looking ahead, the possibility of stagflation is increasingly entering the conversation. Historically, gold performs well in such environments, particularly when central banks are forced to balance slowing economic growth with persistent inflation.
If economic data begins to weaken—through rising unemployment or slowing manufacturing activity—while inflation remains elevated, real interest rates could fall. This would provide a strong tailwind for gold.
The FirstGold Perspective
While short-term volatility is likely to persist, the current pullback and subsequent rebound reinforce a critical point: gold remains a strategic long-term asset.
Periods of market stress, geopolitical instability, and inflationary pressure have historically provided some of the best opportunities to accumulate physical gold and silver. As prices consolidate and sentiment remains fragile, disciplined investors understand the value of cost averaging into tangible assets.
In uncertain times, physical bullion is not just an investment—it is financial insurance.
FirstGold continues to advocate a long-term, accumulation-based approach, allowing investors to steadily build holdings in gold, silver, and platinum—positioning themselves for the next major move in the precious metals cycle.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a licensed financial advisor before making investment decisions.
