A financial institution has indicated that renewed geopolitical uncertainty stemming from escalating Middle East tensions is generating fresh momentum for the gold market. Should the situation intensify, gold prices could easily reach new historic highs.
Bernard Dahdah, a precious metals analyst at Natixis, stated in a recent report that based on an analysis of past conflicts, a 15% rise in gold prices is possible if tensions between the U.S. government and Iran worsen, driven by renewed safe-haven demand.
"Most of the price increase would occur within the first few weeks. After that, as markets assess the impact and adjust, we anticipate prices will begin to decline," he explained. "Given the current sideways trend, we estimate this could push gold to between $5,500 and $5,800 per ounce within two weeks after any military action begins."
Dahdah noted that gold has regained strength this month as U.S. President Donald Trump intensified his tough rhetoric toward Iran. Geopolitical uncertainty pushed prices above $5,000 per ounce last week; however, despite holding above key support levels, the metal has struggled to sustain gains above $5,200.
As of Wednesday, spot gold broke above $5,200 per ounce, rising 1.13% on the day.
Although gold has room to climb further amid geopolitical uncertainty, Dahdah also cautioned that safe-haven demand can be highly volatile and rarely leads to sustained price increases.
"Once the conflict stabilizes, the gains tend to be erased. This could happen in a matter of days or weeks, even if the conflict itself lasts longer," he said.
Regarding what to expect from a potential confrontation, Natixis suggested the Trump administration is likely to follow its recent pattern of limited, targeted actions. The French bank also projected that any crisis in the Middle East would likely last about one month.
"Our reasoning is that the Trump administration prefers to limit itself to removing high-level Iranian hardliners while preserving the regime’s structure and security apparatus, similar to the approach in Venezuela," Dahdah said. "This contrasts with the Bush administration’s strategy of imposing democracy, as seen in Iraq and Afghanistan, where the U.S. overthrew the existing regimes and military."
In his State of the Union address on Tuesday, Trump claimed that even as Iran engages in talks with Washington, it is actively rebuilding its nuclear program. This has fueled speculation that he may be preparing for another round of military strikes in the coming days.
Trump stated that after U.S. airstrikes last year crippled Iran’s nuclear program, Iranian officials are "once again pursuing their sinister ambitions." "They want a deal, but we haven’t heard those secret words: 'We will never have nuclear weapons,'" he added. "We wiped it out, and they want to restart it."
Iran has long insisted its nuclear program is solely for peaceful purposes. Earlier on Tuesday, Iranian Foreign Minister Mohammad Javad Zarif posted on social media that Iran "will not develop nuclear weapons under any circumstances."
Trump’s special envoy Steve Witkoff and son-in-law Jared Kushner are scheduled to hold a new round of talks with Iranian officials in Geneva on Thursday. Trump warned that if negotiations fail, he is considering a range of military options, though he expressed a preference for reaching a deal. Public statements from Trump and administration officials have been inconsistent regarding what they actually hope to achieve in a new agreement with Tehran.
Zarif said, "An agreement is achievable, but only if diplomacy is prioritized."
Earlier on Tuesday, U.S. Secretary of State Mike Pompeo and CIA Director John Ratcliffe briefed senior lawmakers on the Iran situation. There is growing pressure on the White House to justify its military buildup—including aircraft carriers, missile destroyers, fighter jets, and refueling aircraft. According to an anonymous source familiar with the matter, the meeting with the so-called "Gang of Eight" lasted about an hour.