Gold prices held onto a four-day advance in early trading, as investors weighed the implications of renewed tariff rhetoric from Washington alongside heightened tensions in the Middle East, particularly involving Iran. Spot gold hovered near recent highs after climbing more than 1% over the previous week, reflecting a cautious tone across global capital markets. The move comes amid fluctuating bond yields and persistent geopolitical risk, factors that have historically supported demand for safe-haven assets.

Trade Policy Uncertainty Revives Volatility Hedge Demand

Markets have grown increasingly sensitive to trade policy signals after U.S. officials reiterated the possibility of new or expanded tariffs on select imports, rekindling concerns about global supply chains and inflationary pressures. Although no formal measures have been implemented, the rhetoric alone has been sufficient to lift volatility expectations across equities and currencies.

Gold typically benefits during such episodes, as investors seek assets less directly exposed to trade flows and corporate earnings cycles. In recent sessions, the metal’s advance coincided with modest declines in U.S. real yields, a key driver of bullion prices. When inflation-adjusted yields fall, the opportunity cost of holding non-interest-bearing gold decreases, making it more attractive relative to fixed-income instruments.

For Israeli institutional investors and global asset managers alike, tariff-driven uncertainty adds another layer of complexity to asset allocation decisions already shaped by diverging central bank policies and uneven global growth.

Iran Tensions Add Geopolitical Premium

Beyond trade dynamics, developments involving Iran have reintroduced a geopolitical risk premium into energy and metals markets. Reports of increased military posturing and diplomatic strain have raised concerns about potential disruptions to oil supply routes in the Gulf region, a critical artery for global energy markets.

Historically, periods of heightened Middle East tensions have coincided with stronger gold performance, particularly when accompanied by volatility in crude prices and equity indices. The link is partly psychological—gold’s status as a store of value during systemic stress—and partly structural, as risk-off flows often translate into allocations toward bullion-backed exchange-traded products and futures.

While there has been no confirmed supply disruption, the mere prospect of escalation has been enough to shift short-term positioning in commodities markets.

Dollar and Yield Dynamics Remain Central

The U.S. dollar index has traded within a relatively tight range in recent sessions, limiting both upside and downside momentum for gold. A stronger dollar typically weighs on bullion by making it more expensive in other currencies, while a weaker greenback tends to provide support.

At the same time, U.S. Treasury yields have retreated from recent peaks, reflecting softer economic data and cautious forward guidance from policymakers. Should yields resume their ascent—particularly real yields—gold’s rally could face headwinds. Conversely, any sign of slowing growth or a dovish policy shift would likely reinforce the current uptrend.

Looking ahead, investors will monitor official trade announcements, diplomatic developments involving Iran, and upcoming U.S. macroeconomic data releases. The interplay between geopolitical risk, tariff policy, and interest rate expectations will remain pivotal. For now, gold’s resilience underscores its continued relevance as a strategic hedge within diversified portfolios, particularly during periods when political and economic fault lines intersect.