Key Takeaways
- Gold climbed above $3,400, nearing its all-time high as Middle East conflict escalates.
- Gold surpassed the euro in 2024 to become the second-largest global reserve asset, with central banks boosting purchases.
- Major stock indices fell and oil spiked, while bitcoin remained stable at $105,000 during the turmoil.
Gold prices have surged above $3,400, approaching a record high, as heightened geopolitical tensions in the Middle East prompt investors to seek safe-haven assets.
The latest rally comes after gold rebounded nearly 5% in the past month, climbing from a mid-May low of $3,123.
In 2025, gold is up over 30%, outpacing most other asset classes.
Geopolitical uncertainty drives demand
The escalation of conflict following Israel’s military actions against Iran’s nuclear sites has rattled global markets.
The Dow Jones Industrial Average dropped 679.83 points and the S&P 500 fell 1.13%, while oil prices spiked 7% in a single day—marking the largest intraday move since the early Ukraine conflict.
As inflation fears mount, gold’s reputation as a hedge against instability has been reinforced. Despite initial volatility, bitcoin recovered to $105,000 at the time of reporting, maintaining relative stability during market turmoil.
Gold overtakes euro in global reserves
According to the European Central Bank, gold surpassed the euro in 2024 to become the world’s second-largest reserve asset, now representing 20% of global reserves.
The U.S. dollar remains dominant at 46%, while the euro’s share has dropped to 16%. Central banks have been net buyers of gold for three straight years, with annual purchases exceeding 1,000 tonnes—double the previous decade’s pace.
Prominent gold advocate Peter Schiff commented:
“Gold is close to a new record high, but the $GDX is already trading at its highest level since Sept. 2012… Got gold?”
While bitcoin has shown resilience, gold continues to be the preferred hedge during periods of acute geopolitical and economic risk.
