Escalating tensions between the United States and Iran sent oil prices sharply higher and kept gold near record levels on Thursday, as investors weighed the risk of a prolonged conflict in the Middle East and its impact on global markets.
Brent crude rose to around $70.50 a barrel after surging more than 4% in the previous session, while US crude climbed above $65, as traders priced in the possibility of supply disruptions from the oil-producing region.
“The balance of risks now tilts to a US strike after market close Friday,” said Michael Every, senior global strategist at Rabobank, adding that any military action could last weeks rather than ending quickly.
European shares also edged 0.1% lower on Thursday after a mixed set of corporate results, with energy stocks rising alongside firmer oil prices as US-Iran tensions kept investors cautious.
Increased US military activity in the region has left markets on edge, despite diplomatic efforts in Geneva this week aimed at narrowing differences over Iran’s nuclear program.
Safe-haven demand pushed spot gold up 0.5% to around $5,004 per ounce, after a more than 2% jump the previous day. US gold futures also edged higher.
“If there’s anything fundamental you could point to that would be supporting gold prices, it’s the prospect of conflict in the Middle East and the kind of safe-haven demand that goes along with it,” said Kyle Rodda, senior market analyst at Capital.com.
Gold has also drawn support from expectations that US interest rates could ease later this year, though minutes from the Federal Reserve’s January meeting showed policymakers were in no rush to cut rates and some remained open to further hikes if inflation stays elevated.
Asian equities were mixed, with gains in technology stocks offsetting caution over geopolitics. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%, while Japan’s Nikkei gained 0.7%. South Korea’s Kospi jumped more than 3% to a record high, buoyed by renewed optimism over artificial intelligence-related shares.
Still, analysts said geopolitical risk was capping broader risk appetite.
“The two nations have long been at loggerheads over Iranian nuclear activity,” one market participant in Asia told Reuters, adding that any disruption to shipping routes or energy infrastructure could ripple through global supply chains.
For now, traders say oil and gold are likely to remain sensitive to headlines from Washington and Tehran, with volatility expected to persist as the prospect of military action looms.
The imagery shows a new facility at the Parchin military complex covered with a concrete shield and soil, while tunnel entrances at the Isfahan nuclear site have been backfilled.
Tunnel access at Natanz and missile bases damaged during last June’s 12‑day conflict with Israel have also been strengthened.
The reconstruction appears designed to address weaknesses exposed during the brief war, when Israeli strikes targeted Iranian nuclear and military infrastructure and Tehran responded with missiles and drones.
The United States held five rounds of negotiations with Iran over its disputed nuclear program last year, for which Trump set a 60-day deadline.
When no agreement was reached by the 61st day on June 13, Israel launched a surprise military offensive, followed by US strikes on June 22 targeting key nuclear facilities in Isfahan, Natanz and Fordow.
The fortification work comes as indirect nuclear talks in Geneva remain unresolved. Iran is preparing a written proposal to address US concerns, while Washington has reinforced its regional military posture, including carrier strike groups and additional naval assets, amid concerns that diplomacy could stall.
The Reuters report said the combination of hardened facilities, ongoing military readiness, and persistent diplomatic negotiations reflects Tehran’s dual strategy of safeguarding strategic infrastructure while keeping open the possibility of a negotiated settlement.
The United States has long insisted that Iran must completely halt its uranium enrichment program, stop supporting its armed allies in the Middle East and accept restrictions on its ballistic missile program.
Iran’s Supreme Leader Ali Khamenei said on Monday the United States will never succeed in toppling the Islamic Republic and warned that even the world’s strongest military can suffer crippling blows.
