Gold Inches Higher, Oil Spikes as U.S. Joins Israeli Strikes on Iran
Saturday, July 19th 2025
Markets opened the week in a defensive posture, with gold and oil making notable moves as investors digested the latest military escalation in the Middle East. The U.S. participation in Israeli-led airstrikes on Iran’s nuclear infrastructure has triggered heightened geopolitical anxiety, prompting increased demand for safe-haven assets and sparking concerns over global energy supply disruptions.
Gold Rally Continues, Fueled by Safe-Haven Flows
Gold prices climbed as much as 0.8% in early trade on Monday, before paring some of those gains. By 7:47 a.m. in Singapore, spot gold stood at $3,375.04 per ounce, just a hair below its all-time peak from April. This advance comes amid mounting investor unease over Iran’s potential response to coordinated strikes by the U.S. and Israel on three key nuclear sites.
Analysts note that gold has already gained nearly 30% year-to-date, propelled by a combination of central bank buying, global economic uncertainty, and a rising tide of geopolitical instability.
“Investors are reacting to dual triggers—growing conflict in a key energy-producing region and the broader backdrop of accommodative monetary policy,” said Bas Kooijman, CEO at DHF Capital SA. “Together, they’re keeping gold prices elevated and likely to test new highs.”
However, gains remain capped for now, as Tehran has yet to retaliate in a major way, and appears reluctant to provoke Beijing—its key economic partner—into a scenario that could send oil prices soaring. Russia and China have issued only verbal condemnations, while Iran-backed proxy groups have so far held back from joining the conflict.
Dollar and Other Metals Show Mixed Moves
The Bloomberg Dollar Spot Index edged up 0.1%, limiting further upside for gold as a stronger dollar typically makes the metal more expensive for international buyers. Meanwhile, silver recorded modest gains, while platinum and palladium slipped.
Oil Surges to 5-Month Highs on Supply Concerns
Oil markets reacted sharply, with Brent crude hitting $81.40 per barrel and WTI peaking at $78.40—their highest levels since January—before moderating slightly. As of early Monday, Brent was up 2.49% at $78.93, while WTI gained 2.56% to $75.73.
Market participants are increasingly anxious about potential retaliation from Iran that could target energy transport routes. In particular, the Strait of Hormuz, through which 20% of the world’s crude supply passes, is back in focus. Iran’s parliament has reportedly approved a measure to close the critical waterway, though such threats have not materialized in past confrontations.
“The threat to oil infrastructure in the region is rising fast,” noted June Goh, senior analyst at Sparta Commodities. “Even with alternative export pipelines, a closure of the Strait would inevitably choke global crude flows.”
Goldman Sachs Weighs In on Oil Price Scenarios
In a weekend research note, Goldman Sachs warned that if oil flow through the Strait were halved for even one month, Brent could briefly spike to $110 per barrel. A sustained disruption could keep prices elevated for months, the bank said, though it maintained its base-case assumption of no major long-term supply interruption.
Since the onset of the Israel-Iran hostilities on June 13, Brent crude has advanced 13%, while WTI has added around 10%, reflecting the growing geopolitical risk premium now priced into markets.
That said, Ole Hansen, head of commodity strategy at Saxo Bank, cautioned that unless an actual supply crisis materializes, oil’s gains could be short-lived. “We may see profit-taking in long positions, especially after such a steep run-up,” he said in a market commentary.
Outlook: Volatility Ahead as Markets Watch Tehran
With global investors now closely watching for any tangible Iranian military response, both gold and oil markets are likely to remain volatile. The fear of broader regional conflict—especially involving a choke point for global energy—continues to support safe-haven flows into gold, while speculative bets fuel the rally in crude.
But absent a dramatic escalation or direct supply disruption, analysts suggest markets may be nearing a near-term peak, at least until the next major geopolitical or monetary policy shift emerges.
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