The gold price soared above $3,440/oz on Friday, nearing a record high, after Israel launched an attack on Iranian nuclear and military facilities.
The offensive raised concern about escalating tension in the Middle East, a major oil-producing region, which threatens to add further uncertainty to financial markets.
That drove a surge in safe-haven demand as investors flocked to gold as a hedge against the volatile financial and geopolitical landscape.
By the close of trade on Friday the precious metal was trading at $3,448.30, while Brent crude oil had leapt almost 8% on mounting fears of supply disruptions.
Though gold eased on some profit-taking on Monday, it was still around $3,400/oz.
Shares in gold mining companies rose sharply amid the favourable metal price environment, with the JSE precious metals and mining index closing 0.29% higher even as the ovderall market took a pounding on news of Iran’s retaliatory strikes against Israel which launched a wave of missiles at Tehran.
The best performer was AngloGold Ashanti, which added 4.3% to a record high of R897. Gold Fields climbed 1.29% R451.52.
Harmony Gold gained 1.86%, while DRDGold closed 0.82% former and Pan African Resources added 1.92%.
Citadel director Bianca Botes said the precious metal’s surge “directly followed Israel’s military action against Iran, with Israeli Prime Minister Benjamin Netanyahu confirming that the strikes targeted Iran’s nuclear facilities while acknowledging Iran’s continued ability to respond”.
“Iran has promised to retaliate against Israel and the US, and there are already reports of Iran launching drones into Israel,” said TreasuryOne currency strategist Andre Cilliers.
Outside the Middle East, gold continues to benefit from US policy uncertainty and trade wars, and has gained more than 30% this year thanks to safe-haven demand.
The unveiling of US President Donald Trump’s sweeping reciprocal tariffs in early April drove the metal to a high of $3,167.94/oz, having breached the $3,000/oz level in March amid growing concern over Trump’s potentially inflationary trade policies.
Gold’s rally dates back to 2022, when the US froze Russia’s central bank assets after its invasion of Ukraine, resulting in a big increase in the rate of gold purchases by central banks.
That resulted in three consecutive years of more than 1,000 tonnes of central bank gold purchases — more than double that from 2010-2021.
Last year gold recorded its best showing since 2010, outperforming all major asset classes based on indices from Bloomberg and the ICE Benchmark Administration.
Over the course of 2024 the gold price set 40 record highs and gained 25.5% by year-end as global elections and heightened geopolitical risk pushed central banks and investors to the asset, offsetting a decline in consumer demand.
According to its latest commodity market outlook, the World Bank expects gold prices to rise by 36% this year to an average of $3,250/oz, before softening slightly to $3,200/oz in 2026.
“The sharp ascent of gold prices — once again breaking records this year — offers a market-based barometer of the extent to which geopolitical concern remain highly salient to investors,” reads the World Bank report.
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