Gold Seen Gapping Higher as Markets Price Gulf Escalation, Tokenized Bullion Trades at Premium

U.S. and Israeli strikes on Iran have sharpened risk aversion across global markets, with bullion positioned as a primary hedge against geopolitical and inflation shocks when trading resumes.

Spot gold ended Friday up 1.7% at $5,277 per troy ounce, its highest close since January 30. The metal’s record high stands at $5,594.82, reached on January 29. Analysts expect safe-haven inflows to accelerate at Monday’s open, particularly if concerns over oil supply disruption intensify.

Edward Meir, analyst at Marex, said commodities could see an immediate surge. “I think you’re going to see a knee jerk spike up in most commodity markets, including gold and oil. This will be a natural response to the outbreak of hostilities, which was rather unexpected in terms of scale and scope.”

He added that gold could initially jump by as much as $200 per ounce before paring gains. “The markets are rather dispassionate when it comes to military conflicts; the only thing investors are ultimately focused on is whether the oil flows will be interrupted so once the initial spike is over, the initial rally tends to fade,” he said.

The Strait of Hormuz, a conduit for roughly one-fifth of global oil consumption, remains central to pricing expectations. Any sustained restriction on crude flows would reinforce inflation concerns, potentially strengthening the case for bullion as a hedge.

Tokenized gold signals weekend bid

With traditional exchanges closed, digital proxies have offered an early gauge of sentiment. Hugo Pascal, a precious metals trader at InProved, said tokenized gold was trading at a premium over spot benchmarks.

“PAX Gold (PAXG) is currently leading the charge at $5,344/oz (+2.2% since Friday), while Tether Gold (XAUt) has climbed to $5,292/oz (+1.2%),” he said. “With traditional exchanges closed, tokenized gold is currently trading at a premium, signaling a bullish ‘flight to safety’ ahead of the week’s open. Our digital proxies are showing a strong weekend bid.”

Pascal cautioned that weekend premiums can exaggerate the magnitude of any opening gap.

“That weekend proxy premiums often overstate the initial gap but accurately reflect the direction,” he said.

Broader risk-off positioning expected

Tim Waterer, chief market analyst at KCM Trade, said gold would likely attract heightened demand as investors reassess portfolio risk.

“Gold is likely to be in higher demand than usual when markets open on Monday,” he said. “Given the risks regarding how long the conflict may last, which other nations could be dragged in, and inflation fears, gold is expected to assume its mantle as the safe haven asset of choice.”

He added that equities and other risk-sensitive assets could face selling pressure. “Investors will be looking for the best place to park their funds, and gold will likely be atop that list,” he said.

The interplay between bullion and oil will be decisive. A sustained spike in crude could fuel inflation expectations and lift gold through both hedging demand and potential downward pressure on real yields. Conversely, if energy flows remain largely intact, gains may moderate after an initial surge.

Dubai hub faces logistical bottlenecks

Physical supply chains are also under strain. Dubai, one of the world’s largest bullion trading hubs, is facing temporary paralysis as airlines suspend flights amid escalating hostilities.

Three industry sources said physical gold flows to and from Dubai would be severely curtailed in the coming days. The emirate is a key supplier to Switzerland, Hong Kong, and India. Gold is typically transported by air due to its high value-to-weight ratio and associated security and insurance requirements.

“It looks like most if not all airlines have cancelled their flights, so not going to be any gold moving for a couple of days,” one source said.

The extent of global supply disruption will hinge on how long flight cancellations persist. Another source said early-week price action would likely be driven more by financial flows through Shanghai, London, and New York than by immediate physical tightness.

“The major locations – China, India, New York, London and Zurich – are still okay,” a trader said.

The market focus is currently squarely on geopolitics and energy transit risk. If the conflict widens or oil exports from the Gulf are materially affected, bullion’s bid could extend beyond an opening spike, testing levels closer to January’s record peak.