Gold struggles to hold safe-haven bid but geopolitical uncertainty continues to support prices

Gold failed to sustain a classic safe-haven rally after a Middle East shock: following reports that the U.S. and Israel launched missiles at Iran, spot gold spiked to around $5,400/oz early in the week but quickly reversed as profit-taking emerged. The pullback underscores that geopolitics-driven moves can fade fast once initial risk aversion subsides. Kitco notes the main headwinds were a firmer U.S. dollar and the view that the Fed has limited near-term scope to ease. The escalation has lifted energy prices and revived inflation concerns, which could keep policy restrictive/neutral and Treasury yields elevated—raising the opportunity cost of holding non-yielding gold. Despite the reversal, gold is described as holding support at “historically elevated levels,” suggesting underlying demand remains robust. The article highlights structural tailwinds: high global debt may cap how far rates can rise before policy makers are forced toward cuts or bond-market support, and deglobalization/geopolitical fragmentation is encouraging ongoing (if slower) central-bank diversification into gold. Near-term, the key catalyst is whether the conflict broadens or remains contained; markets are not currently pricing a prolonged crisis. A sustained rise in oil/inflation expectations and a stronger USD could pressure gold further, while renewed risk-off flows and/or a shift back toward rate cuts would likely re-energize the safe-haven bid.