Gold, Silver Rally Amid US-Israel Strikes on Iran

Escalating military conflict between the United States, Israel, and Iran has driven gold to US$5,395.99/oz and silver to US$95.17/oz as investors seek safe-haven assets amid heightened geopolitical risk. The crisis disrupts global energy markets, particularly through the Gulf and the Strait of Hormuz, affecting oil prices, trade flows, and investment confidence. Mexican stakeholders in mining, precious metals trading, energy, and commodities-linked investment funds face increased market volatility, while Gulf supply disruptions and risk-off positioning in financial markets may influence Mexico’s trade and energy cost exposure.

Precious metals prices have climbed after escalating military conflict between the United States, Israel and Iran drove investors into traditional safe-haven assets, pushing bullion toward a four-week high and extending the rally this year. Spot gold advanced strongly early March 2 as markets reacted to intensified geopolitical risk, with silver also rising amid investor flight from risk assets.

Spot gold gained as much as 2.3% to US$5,395.99/oz, nearing its highest level in more than four weeks, while US gold futures rose over 3% to US$5,411.40/oz in early trade. The rally extended gold’s strong performance after a previously sustained uptrend in 2025, when prices surged 64% driven by central bank buying, robust inflows into exchange-traded funds and expectations of US monetary easing. Prices briefly approached levels seen in late January, when gold hit a record high of US$5,594.82/oz on Jan. 29.

Market analysts attributed the latest gains to heightened geopolitical tension following joint strikes by the United States and Israel on Iran over the weekend that reportedly killed Supreme Leader Ayatollah Ali Khamenei. The strikes triggered a series of Iranian retaliatory attacks, further amplifying uncertainty in global markets and prompting investors to seek havens.

Heightened risk aversion also surfaced in other markets. US stock index futures fell sharply and oil prices spiked as traders assessed the potential impact of the widening conflict on global energy supply and economic growth.

Investors were also awaiting key US labor data, including the ADP employment report, weekly jobless claims, and the non-farm payrolls report, which could influence Federal Reserve policy expectations amid rising geopolitical risk.

Silver Climbs as Bullion Demand Rises

Silver prices also rose amid the shift toward safe-haven assets, though gains were more modest than for gold. Spot silver climbed around 1.4% to US$95.17/oz, reaching its highest levels since late January. The rise in silver followed similar patterns seen in gold, as geopolitical tensions and market risk aversion lifted demand for both majors. Precious metal prices have proved sensitive to headlines from the Middle East, with silver’s performance often reflecting broader risk sentiment as traders adjust positions.

Analysts noted that silver could remain supported as long as conflict risk persists, but also cautioned that its performance tends to be more volatile and closely linked to industrial demand prospects. 

Iran-US Conflict Drives Market Reaction

Over the weekend, coordinated airstrikes by the United States and Israel targeted multiple locations in Iran, including schools, military bases, and strategic sites, in an effort, according to US officials, to weaken Iran’s security apparatus and prevent further threats. The strikes reportedly resulted in the death of Iran’s Supreme Leader, Ali Khamenei.

In response, Iran launched widespread ballistic missile and drone attacks against US assets and allied positions across the region, including strikes on Israel, Bahrain, Kuwait, Qatar, the United Arab Emirates, and Jordan. Casualties and damage were reported across multiple fronts. In Israel, at least nine people were killed and roughly 450 injured, including one strike that destroyed a synagogue in Beit Shemesh. Gulf states intercepted missiles, though falling debris caused structural damage. A drone attack on a US naval base in Bahrain triggered a major fire. The Pentagon confirmed three US service member deaths and five serious injuries, while US Central Command reported successfully defending against hundreds of Iranian missile and drone attacks.

Meanwhile, in Iran, at least 201 people have reportedly been killed and 747 injured, according to preliminary figures from the Iranian Red Crescent Society and state-linked media. Casualties span multiple provinces, with the deadliest incident occurring at a girls’ elementary school in Minab, where at least 148 students were killed.

US officials have indicated that the military operation may extend over several days, with Reuters reporting that planners anticipate a campaign potentially lasting weeks. In a separate interview with the Daily Mail, President Trump suggested the strikes could continue for up to four weeks.

Iranian officials have rejected claims of renewed nuclear negotiations with the United States. Ali Larijani, Secretary of Iran’s Supreme National Security Council, stated on X that Tehran “will not negotiate with the United States,” criticizing US actions as destabilizing and asserting that US military personnel will bear the cost. Iranian Foreign Minister Abbas Araghchi described the strikes as a “cowardly act of terror” in a letter to the UN Secretary-General, warning of an unprecedented escalation.

Will Gulf States Enter the US-Israel-Iran War?

The Gulf states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) face a complex dilemma, caught between defending sovereignty and avoiding direct involvement in a war largely driven by US-Israel objectives. Regional voices, including Qatar’s former Prime Minister Sheikh Hamad bin Jassim bin Jaber Al Thani, urged restraint, emphasizing that the Gulf Cooperation Council (GCC) should act collectively to confront aggression without being drawn into the conflict. 

“GCC must not be dragged into a direct confrontation with Iran, even though Tehran violated the sovereignty of the Council’s states and was the aggressor. There are forces that want the Council’s states to become directly embroiled with Iran,” Sheikh Hamad wrote. “But a direct clash between the Council’s states and Iran, if it occurs, will deplete the resources of both sides and provide an opportunity for many forces to control us under the pretext of helping us escape the crisis.”

Analysts suggest that the Gulf may eventually take independent measures, potentially through the GCC’s Peninsula Shield Force, to assert control and maintain legitimacy rather than facilitating operations for external powers.

The conflict also carries broader implications for global energy markets. The Gulf produces a substantial share of the world’s oil, with the Strait of Hormuz serving as a key transit point. Disruptions could affect global trade flows, energy prices, and investor confidence. Beyond physical infrastructure, analysts warn of reputational risks, as Gulf states’ long-standing image as stable, investment-friendly environments is under pressure.