Gold Stays Put Amid Escalating Middle East Conflict

The global conflict in the Middle East has escalated, but despite rising oil prices, gold prices have remained relatively stable at around $4,000 an ounce. This may seem counterintuitive given that gold is often seen as a safe-haven asset during times of war and crisis.

One reason for this stability is the increasing cost of holding onto physical gold, particularly in countries with high inflation rates. The real interest rate has climbed to its highest level since January 2025, which makes holding onto gold less attractive compared to other investment options.

The Federal Reserve and the Bank of England are expected to hold their interest rates steady this week, but flag the risk of hikes down the road. This could further push up the real interest rate and make gold even less appealing to investors.