By: Payel
Published on: Jun 14, 2025
On June 13, 2025, financial markets around the world were shaken as geopolitical tensions escalated dramatically following Israeli airstrikes on Iran. The immediate fallout was a sharp surge in gold prices, which reached their highest levels in nearly two months. As investors scrambled to shield their portfolios, traditional safe-haven assets such as gold and the US dollar gained ground, while oil prices spiked and the British pound slumped. Here's a deep dive into what drove the market movements and what traders and investors should watch next.
Gold futures soared to a high of $3,452.60 per ounce, a near two-month peak, gaining approximately 1.5% by market close. Spot gold prices also jumped, climbing 2% to $3,414.79 per ounce.
The renewed conflict in the Middle East, specifically the Israeli military’s strikes on Iranian infrastructure, led to a swift pivot by investors towards safe-haven assets. Gold, a traditional refuge during times of crisis, benefited directly from this geopolitical uncertainty.
"The geopolitical escalation adds another layer of uncertainty to already fragile sentiment," said Charu Chanana, Chief Investment Strategist at Saxo.
Gold has historically performed well during times of geopolitical unrest, and the current rally fits this pattern. In addition to rising conflict, growing expectations of interest rate cuts by the US Federal Reserve added further fuel to gold’s upward trajectory. Weaker jobless claims and subdued producer price index (PPI) inflation reinforced the possibility of easing monetary policy, which tends to favor non-yielding assets like gold.
The Israeli government quickly declared a state of emergency following the airstrikes, citing potential missile and drone retaliation by Iran. In parallel, the US military prepared evacuation plans for American citizens in the region.
"This latest spike in hostilities in the Middle East has taken the focus off trade negotiations for now, with investors making a play towards safe-haven assets," commented Tim Waterer, Chief Market Analyst at KCM Trade.
Waterer noted that gold breached a major resistance level around $3,400—a psychological and technical barrier. If tensions continue to escalate, further gains in gold prices are likely.
Brent crude oil prices skyrocketed by over 7.5%, reaching $74.56 a barrel, while West Texas Intermediate (WTI) futures rose to $73.18 per barrel. This marked the fastest single-day gain in over three years.
The concern? A potential disruption in oil shipments through the Strait of Hormuz, a narrow but crucial maritime chokepoint that handles nearly 20% of the world’s oil trade. Iran exports over 1.6 million barrels of oil per day, primarily to China.
"We are back in an environment of heightened geopolitical uncertainty," said Warren Patterson of ING. "The oil market must now price in a larger risk premium for supply shocks."
Oil market analysts are wary that if the conflict spreads to other oil-producing neighbors or escalates into infrastructure attacks, it could dramatically tighten global supply and reignite inflationary pressures worldwide.
Iran’s declaration of a national emergency and signs of imminent retaliation raised fears not just about oil disruptions but broader market contagion. Phillip Nova analyst Priyanka Sachdeva noted that “the likelihood of involvement from other regional players could increase market volatility significantly.”
"Although Trump has shown reluctance to participate, US involvement could further raise concerns," she added.
MST Marquee's senior energy analyst Saul Kavonic offered a more cautious perspective, suggesting that the real threat to oil supply lies in potential Iranian strikes on infrastructure, not the airstrikes themselves.
The British pound slipped 0.4% to $1.3558 against the US dollar in response to broad risk aversion. Currency traders shifted into the greenback as a defensive play, pushing the US Dollar Index (DXY) up by 0.3% to 98.19.
"Full-scale war in the Middle East moves another step closer," said Tatha Ghose of Commerzbank. "Until the danger of further escalation has passed, safe assets are likely to remain in demand."
Against the euro, the pound remained relatively stable at €1.1744, as European markets also felt the shockwave from the developments in the Middle East.
The FTSE 100 index (^FTSE) dropped by 0.6% to 8,834 points amid broad-based selling in energy, airline, and industrial stocks. While energy shares got a temporary boost due to rising oil prices, the overall mood was cautious, with investors fearing prolonged conflict and its impact on inflation and global growth.
Any further retaliation by Iran or expanded military activity by Israel could deepen market reactions. Keep an eye on whether the Strait of Hormuz remains open, as any disruption could cause oil prices to explode higher.
Recent US economic data has hinted at softening inflation. If the Fed signals a dovish pivot at its next meeting, gold could rally further.
Watch movements in assets like gold, the Japanese yen, and the Swiss franc. These often act as barometers of global market fear.
The GBP/USD pair may remain under pressure if geopolitical concerns persist and the US dollar continues to attract inflows. The euro and emerging market currencies could also see more volatility.
The Israeli airstrikes on Iran have reignited fears of a broader regional conflict, sending gold to multi-month highs and pushing oil prices sharply higher. As investors retreat into safe-haven assets, the pound weakens and equity markets wobble. With both geopolitical and economic variables in flux, traders must stay nimble and monitor developments closely.
Gold's momentum is far from over, especially with the prospect of Fed rate cuts and a volatile global landscape. Oil markets, meanwhile, could remain on edge until clearer signs emerge on Iran’s response. In short, markets have entered a risk-on/risk-off cycle where headlines will move prices faster than fundamentals.
Stay tuned—and hedge smartly.
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