Gold holds near $5,185 per ounce as Middle East conflict keeps safe-haven demand elevated

Spot gold traded at $5,183 per ounce on Thursday morning in London, essentially flat from Wednesday's close of $5,187. That steadiness is itself the story. Gold has now held above $5,100 for nine consecutive trading sessions, which has not happened at any price level in the metal's recorded history. The US-Israel military campaign against Iran, now in its third week, has removed the usual reasons investors might rotate out of gold into risk assets. When the risk is this visible and this ongoing, gold tends to stay bid.

US gold futures on the COMEX contract for April delivery settled at $5,201 per ounce on Wednesday, a modest 0.3 percent gain on the day. Open interest on COMEX gold futures rose to 612,000 contracts, the highest level since October 2023, according to CME Group data. Rising open interest alongside rising prices generally indicates that new money is entering the market rather than existing positions being rolled forward, which suggests the current demand is not simply technical positioning.

What is actually driving gold at this price level

Gold has three primary demand drivers operating simultaneously at the moment. Central bank buying, which began accelerating in 2022 after Western sanctions froze Russia's dollar reserves, has continued in 2025 at a pace well above the 20-year historical average. The World Gold Council reported that central banks purchased 1,045 metric tons of gold in 2024, the third consecutive year above 1,000 metric tons. Before 2022, the last time central bank buying exceeded that level was 1967.

The second driver is retail and ETF demand from investors who are concerned about dollar-denominated asset risk in a high-deficit US fiscal environment. SPDR Gold Shares, the largest gold ETF by assets, reported net inflows of $3.2 billion in February 2025 alone, its largest monthly inflow since August 2020. The third driver, and the most recent addition, is direct geopolitical fear buying tied to the Iran conflict and the Strait of Hormuz closure. These three forces are not pulling in different directions. They are all adding to the same bid.

Energy equities are attracting some capital, but gold is not losing it

Commodity analysts at StoneX noted in a March 13 research note that some institutional investors are rotating capital into energy equities as oil prices rise, on the thesis that upstream oil producers benefit directly from higher crude prices. ExxonMobil, Chevron, and ConocoPhillips shares are up between 14 and 19 percent since the Iran campaign began. That rotation is real, but it has not produced gold outflows. The money moving into energy stocks appears to be coming out of technology equities and fixed income, not precious metals.

That pattern makes sense given the inflation backdrop. Fixed income performs poorly in an inflationary environment because the real value of coupon payments erodes. Technology stocks with high price-to-earnings multiples are sensitive to interest rate expectations, and JPMorgan's projection that PCE inflation could re-accelerate to 3.1 percent by July has reduced the probability of Fed rate cuts this year. Gold, which has no coupon and no earnings multiple, is not exposed to either of those headwinds.

The $5,000 level and how quickly gold got here

Gold crossed $5,000 per ounce for the first time on February 19, 2025, a milestone that received significant media coverage. It has added another $185 since then in less than four weeks. The move from $4,000 to $5,000 took approximately eight months between June 2024 and February 2025. The move from $5,000 to $5,185 took less than a month. Acceleration at this scale in a commodity market often indicates that stop-loss orders from short sellers are being triggered, adding mechanical buying pressure on top of fundamental demand.

Citigroup's commodities desk published a price target revision on March 11, raising their 12-month gold forecast to $5,500 per ounce, up from their previous target of $4,800. The revision cited three specific factors: the Iran conflict's uncertain duration, continued central bank buying above historical norms, and a reduced probability of Federal Reserve rate cuts in 2026. Goldman Sachs maintained its existing 12-month target of $5,300, last updated in January, but a desk note on March 12 said the team was reviewing the target given the speed of the recent move.

Silver and platinum are also rising, but not at gold's pace

Silver spot prices reached $52.40 per ounce on Thursday, up 28 percent since the start of the Iran campaign. That is a larger percentage gain than gold over the same period, but silver's move is partly amplified by its smaller market and partly by separate industrial demand dynamics tied to the solar panel supply chain, which uses silver extensively. The gold-to-silver ratio has tightened from 105:1 to 99:1 over the past three weeks, which precious metals traders often interpret as a sign that the broader metals complex is entering a more speculative phase.

Platinum, which has industrial uses in catalytic converters and hydrogen fuel cells, rose to $1,420 per ounce, a 14-month high. Platinum's gain is more modest because its demand profile is more tightly linked to automotive manufacturing and industrial production, both of which are facing headwinds from the broader economic uncertainty rather than benefiting from it. Palladium, used primarily in gasoline engine catalytic converters, is the outlier, down 3 percent over the same period as investors anticipate slower vehicle sales if energy costs remain elevated.

What could break gold's current price floor

A ceasefire or negotiated pause in the Iran conflict is the most obvious potential catalyst for a gold price pullback. Omani mediation efforts are ongoing, and the US State Department confirmed on March 12 that backchannel communications with Iranian officials have not been fully severed. If a credible ceasefire framework emerges, the geopolitical fear premium in gold, which StoneX estimated at approximately $200 to $300 per ounce above the underlying macro-driven price, could unwind quickly.

A sustained ceasefire that brings oil prices back below $80 per barrel would also reduce inflation expectations, which would revive the possibility of Fed rate cuts. Higher real interest rates, which occur when nominal rates stay flat and inflation falls, make gold relatively less attractive compared to interest-bearing assets. That was the dynamic that kept gold range-bound between $1,800 and $2,000 per ounce through most of 2022 and 2023. None of those conditions are present in the current market, which is why the next FOMC meeting on April 29 and 30 will be closely watched for any signal that the Fed is recalibrating its rate outlook in response to energy-driven inflation.