As US joins Israel-Iran conflict, gold seen testing $3,450; GCC stocks coming under pressure

[Editor's Note: Follow our live blog for real-time updates on the latest developments in the Israel-Iran conflict.]

Gold prices are expected to spike when markets open on Monday following the United States' entry into the Israel-Iran conflict, launching strikes on Iranian nuclear facilities.

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Analysts warn that UAE and other Gulf stock markets will likely come under pressure. However, the overall performance of commodities and equities will depend on how the conflict unfolds over the coming days.

On Sunday, US President Donald Trump confirmed that American aircraft had struck three Iranian nuclear sites, marking a significant escalation in the Middle East.

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Gold prices closed at $3,368.09 per ounce on Friday, down 0.17 per cent. In Dubai, 24K and 22K gold ended the week at Dh406 and Dh376 per gram, respectively.

“Despite low liquidity, this move could be an early signal of how markets will react on Monday,” said Samer Hasn, senior market analyst at XS.com.

He stressed that commodity prices in the coming days will be shaped by how Iran responds to the US strike.

Ahmad Assiri, research strategist at Pepperstone, added that heightened geopolitical tensions are reinforcing bullish sentiment for gold.

“I wouldn’t be surprised if gold opens 1 to 1.5 per cent higher on Monday, potentially breaking above $3,400 and retesting last week's highs near $3,450,” he said.

“Further escalation or retaliation — especially if Iran or its proxies target strategic chokepoints like the Strait of Hormuz or the Strait of Mandeb — will likely keep gold well-supported at elevated levels.”

UAE, GCC stocks

While geopolitical risks will likely dampen short-term investor sentiment in the GCC, Assiri pointed out that rising oil prices could help offset the impact.

“Higher oil revenues often cycle back into local economies, supporting growth and softening the blow of geopolitical shocks. This acts as a natural hedge for GCC governments.”

He also highlighted a divergence in market behavior across the region.

“The UAE market tends to align more with global trends, while the Saudi Tadawul Exchange is more responsive to local and geopolitical developments. When tensions rise, Saudi investors — many of whom keep significant liquidity on hand — often step in to buy, helping the market show surprising resilience.”

He cited early April as an example when the Saudi market posted gains despite major tariff announcements.

Samer Hasn warned that if rhetoric or actions targeting US bases in the region intensify, regional equities could face greater pressure, especially in countries more directly involved in or vulnerable to the conflict.

Oil

With the US now fully engaged, Ahmad Assiri said oil’s baseline pricing has shifted to the mid-$80 range per barrel.

“We’re moving from a regional conflict to a US-managed confrontation, which introduces a higher risk premium. There’s also increased tail risk regarding the potential closure of the Strait of Hormuz. Even if Iran doesn't act, the perceived probability of disruption rising from 5 per cent to 15 per cent alone will create an upward premium in crude prices.”

Brent and WTI crude closed the previous week at $77.01 and $73.84 per barrel, respectively. Prior to Israel’s June 13 strike on Iran, Brent was trading below $70.

Samer Hasn echoed expectations for an oil price rally.

“The escalation with direct US involvement is a significant turning point. If Iran retaliates by targeting oil infrastructure, it could trigger deeper US military involvement to prevent broader economic fallout,” he said.

Hasn added that if such a scenario materializes, oil and gas prices may face sustained upward pressure, particularly around the Strait of Hormuz — a critical global shipping route. However, if no major developments occur soon, market attention may shift back to economic fundamentals.

Waheed Abbas

Waheed Abbas is Assistant Editor, covering real estate, aviation and other business stories that dir...Read More

waheedabbas@khaleejtimes.com