The outbreak of hostilities between the U.S., Israel, and Iran has reignited tensions in the Middle East, driving a sharp rise in gold prices. According to market data, the international gold price briefly surged past 1,230 yuan per gram, gaining over 4% and coming within 30 yuan of its previous peak before quickly retreating to erase most of the gains. On February 28, the U.S. and Israel announced coordinated air and sea strikes against Iran, prompting retaliatory attacks from Iran on American and Israeli military assets across the region. The escalation triggered a spike in both gold and oil prices, with gold breaking above 1,230 yuan per gram before pulling back. By March 1, prices had settled near 1,170 yuan per gram.

Notably, gold has rallied approximately 10% since the Lunar New Year. Recent price strength has been largely influenced by U.S. policy developments. On one hand, escalating pressure on Iran has led to the largest military buildup in the Middle East since the 2003 Iraq War, accelerating gold's upward move following the surprise attack. On the other hand, the announcement of a 15% global import tariff has heightened investor demand for safe-haven assets like precious metals.

Many financial institutions maintain a bullish outlook. Everbright Securities noted that amid ongoing geopolitical uncertainty and trade policy shifts, it remains optimistic about gold's performance this year. Further interest rate cuts by the Federal Reserve in the second half of the year, coupled with persistent political uncertainties, are expected to support continued price appreciation. Hong Kong Gold Exchange Chairman Zhang Dexi anticipates a brief consolidation followed by another leg higher, with prices potentially testing $6,000 per ounce in the second or third quarter.

Investment demand, rather than physical consumption, remains the primary driver of gold's long-term bull market. While jewelry and decorative uses account for about 29% of total demand, and industrial applications make up 6%, investment and central bank purchases represent 43% and 21%, respectively—together nearly 70% of total demand. Central banks have been net buyers for four consecutive years, with acquisitions averaging over 1,000 tons annually. As of January 2026, the top national gold reserves were held by the U.S. (8,133 tons), Germany (3,350 tons), Italy (2,452 tons), France (2,437 tons), Russia (2,330 tons), and China (2,306 tons).

Sustained institutional buying, combined with retail investment, has pushed gold to new highs, with prices rising over 60% in 2025 alone. Historically, gold appreciates during periods of dollar weakness, Fed rate cuts, expanding U.S. debt, and geopolitical instability—all factors that boost its appeal as a hedge. Recent years have seen heightened demand due to conflicts in Ukraine, Middle East tensions, and U.S. policy shifts, further amplified by inflationary pressures.

The latest military actions are expected to lift gold prices to a new plateau. Over the past half-century, gold has delivered annualized returns of around 9% in U.S. dollar terms, outperforming many other asset classes. Its diversified demand base provides resilience across economic cycles. After a significant pre-holiday correction, the market has absorbed selling pressure, and the recent rebound has established a new support level as fresh long positions enter. Although gold faces resistance near previous highs, prolonged conflict could sustain upward momentum, potentially forming an N-shaped price pattern.

While higher prices may dampen physical jewelry demand, which represents a smaller share of the market, the overall impact is limited. Instead, rising gold prices are expected to create substantial investment opportunities across the gold supply chain, particularly for mining companies.

With tensions escalating over the weekend following multiple Iranian counterstrikes, gold-related equities are likely to see increased activity when markets reopen on March 2. Gold miners are positioned to benefit most directly. Industry leaders such as ZIJIN MINING (02899), Zijin Gold International (02259), Zhaojin Mining (01818), and CHIFENG GOLD (06693) are expected to attract investor interest.

ZIJIN MINING, a major player in precious and base metals, ranks among the top five globally in copper reserves and output, and sixth in gold reserves and production. The company produced 90 tons of gold in 2025, exceeding its initial guidance of 85 tons. It aims to produce 105 tons in 2026 and 130–140 tons by 2028. Its market value increased over 160% in 2025 and has risen more than 26% year-to-date.

Zijin Gold International, the spun-off gold unit of ZIJIN MINING, has delivered strong performance, with gold output growing at a 21.4% CAGR from 2022 to 2024. Production reached 46.5 tons in 2025, accounting for more than half of Zijin’s total output, with a target of 57 tons in 2026. Between 2023 and 2025, revenue grew at an average rate of over 30%, while net profit more than doubled. The company recently announced a cash offer of C$44 per share to acquire all outstanding shares of Allied Gold, whose assets include the producing Sadiola mine in Mali, the Bonikro and Agbaou mines in Côte d'Ivoire, and the Kurmuk project in Ethiopia scheduled for production in late 2026. The acquisition is expected to significantly boost gold output. Since its IPO in September 2025, the stock has risen 2.26-fold, with a current market cap of HK$625.73 billion.

CHIFENG GOLD owns and operates six gold mines with total resources of 390 tons. Through upgrades and acquisitions, it has steadily increased production to 15–16 tons, with overseas mines contributing 70–80% of output. Although smaller in scale, the company is advancing several expansion projects, including the Sepon gold-copper mine, which aims to reach 7 tons of annual gold output by 2027, and the Wassa mine, targeting 6.2–7.8 tons by 2028, with a long-term goal of 7.8–10.9 tons. The company has delivered robust financials, with net profit soaring 119% in 2024 and projected to grow 75–86% in 2025. Since its Hong Kong listing in March 2025, the share price has surged 189%, valuing the company at HK$75.37 billion.

In summary, gold's long-term uptrend is primarily driven by investment demand. Historical patterns show that gold performs well during periods of geopolitical risk, inflation, and market uncertainty, often decoupling from broader economic cycles. The latest military escalation is likely to accelerate price gains in the near term. Within the sector, gold mining stocks—particularly ZIJIN MINING, Zijin Gold International, Zhaojin Mining, and CHIFENG GOLD—are well-positioned to extend their rally amid rising price expectations.