Gold prices surged to $4,619 intraday on Monday, closing at $4,580, a 1.5% increase, as investors sought safe-haven assets following threats by Donald Trump to "blow up and completely obliterate" Iran's Kharg Island, oil wells, and power plants, as stated on Truth Social.
The precious metal reached its highest level in over a week as geopolitical tensions escalated in the Middle East, with Brent crude climbing to $117 per barrel intraday, a 3.2% increase. The oil surge contributed to a 59% monthly gain in March 2026, the largest monthly surge recorded since the 1990 Gulf War 36 years ago.
Energy Markets React to Conflict Expansion
The market movements were further influenced by the Houthis' first direct missile strikes on Israel, indicating a widening conflict. The Houthis' entry into the war, firing missiles at Israel in support of Iran, threatens the Red Sea/Bab al-Mandeb shipping route, an alternative Saudi Arabia has been using to bypass Hormuz.
PVM Energy's Tamas Varga warned that "$200 oil will not be an otherworldly supposition" if the United States initiates a ground invasion or seizure of Kharg. David Roche of Quantum Strategy cautioned that if both the Red Sea/Bab al-Mandeb and Strait of Hormuz chokepoints close simultaneously, 4–5 million barrels per day (bpd) could be removed from global markets.
Silver Outperforms as Crisis Deepens
Silver outperformed gold for the first time since the escalation renewed, rising 3.3% to $72.39, its best session in two weeks, and breaking above $72. The gold/silver ratio compressed as silver benefited from both safe-haven demand and a weaker dollar.
Asian markets experienced significant losses due to fears of a global stagflation shock, with the Nikkei falling 4.6% and Hang Seng declining 1.9%. Japan proved particularly exposed as the world's largest net energy importer.
Diplomatic Efforts Stall
Pakistan offered to mediate talks, but Iran rejected the US proposals as "excessive and unreasonable." The market is anticipating further developments, with an Iran deadline on April 6, 3 days from now, February PCE data on April 9, and a possible Warsh hearing on April 13.
Technical Outlook Turns Bullish
Technically, gold's MACD histogram showed compression for the fifth consecutive session, and its RSI was recovering from oversold territory. Gold broke above the Kijun-sen at $4,580, which now acts as support, and tested the Bollinger mid-band at $4,620. Silver's MACD histogram was at its least negative since the war selloff, and its RSI was improving.
Any US military action toward Kharg Island could send oil prices above $150 and gold toward $5,000, while a diplomatic breakthrough could cause oil to collapse by over 20% and gold to retreat to around $4,200. The current market bias is bullish, indicating a shift from rates-driven to crisis-driven dynamics, with a close above $4,620 potentially targeting $4,758.
Why This Matters:
The surge in gold and oil prices reflects markets pricing in significant supply disruption risks that would ripple through the global economy. Energy-intensive industries and consumers face potential cost increases that could trigger stagflation—a combination of stagnant growth and rising prices that constrains both monetary and fiscal policy options. The threat to Kharg Island, which handles a significant portion of Iran's oil exports, represents a potential shock to global energy markets at a time when alternative supply routes through the Red Sea are already threatened. Asian economies, particularly Japan as the world's largest net energy importer, face disproportionate vulnerability. The market's shift from rates-driven to crisis-driven dynamics suggests investors are repositioning away from growth assets toward tangible stores of value, a pattern that historically precedes periods of economic uncertainty and reduced investment activity.