By: Mining weekly

“While the physical flow of gold has been temporarily interrupted in some regions, the gold industry’s diversity is ensuring that if you can't get gold from Dubai, you can probably get it from Singapore and you can certainly get it from Switzerland,” World Gold Council senior market strategist John Reade and World Gold Council senior market strategist North America Joseph Cavatoni agreed as they unpacked gold’s sharp reaction to escalating conflict in the Middle East, its initial surge following geopolitical tensions, before levelling out as markets absorbed the shock. 

“If necessary, there are also quite a few kilo bars in New York after last year, which could be used to supply markets where they need to so.

“This is not a rerun of Covid…but it is something to keep an eye on,” the gold strategists emphasise.

Looking ahead, they expressed the opinion that investors should expect elevated volatility to persist amid ongoing geopolitical risks and disruptive global policy dynamics – conditions that are shaping not just gold, but broader financial markets in 2026.

The Middle East conflict resulted in an immediate rise in the gold price as a reaction to the conflict amid the potential impact of the closing of the Strait of Hormuz between the Persian Gulf and the Gulf of Oman, which provides the only sea passage from the Persian Gulf to the open ocean and is one of the world's most strategically important choke points.

Protraction of closure through conflict could impact safe haven assets like gold, which traded up to around about $5 500/oz the Monday following the attacks on Iran, and at the time of going to press were in the $5 100/oz range.

‘”I certainly don't think that means that this is over in terms of gold moves associated with the Middle East conflict. I just think that investors and traders are settling down a little bit after the initial shock.

“But it is interesting to speak to some people in the market. About supply chain issues, obviously, Dubai is an important physical hub for global gold supply.

“I was ballpark estimating this morning, something like about 20% of physical flows in gold go through Dubai.

“Not much is consumed there itself, but it takes an awful lot of gold, particularly from artisanal and small scale gold mining activities across Africa, and that gold then ends up, typically, into the broader Middle East region, and into India,” Reade pointed out in the World Gold Council’s release to Mining Weekly.

Disruption to the global gold supply chain is linked to Dubai, in the United Arab Emirates, and Doha, the capital of Qatar, being major international flight hubs, but this is not expected to be protracted because gold flows will be re-routed into the important consuming markets of China and India.

The London and Shanghai exchanges are reported working fine at the moment.

Expectations are that materially higher gold volatility levels are likely to be sustained at these higher levels for the foreseeable future.

Since gold started to trade materially higher in 2024, volatility has been ticking higher and its elevation accelerated 2025.

“With what has happened so far this year, in January, and now with this Middle Eastern conflict, implied volatility is high. We're sitting at a level of about 28 volatility for three months, implied, and that's a pretty high level indicative of everything we've discussed in terms of the conflict.

“But I wouldn't expect it to rapidly fall back to the $1 500/oz to $1 800/oz level that we saw a few years ago.

“I think that the changing nature of the marginal buyer of gold over the last 12 months has really played a role,” added Reade.

Cavatoni: I think that's right, John. I think that you've got more people who are invested looking at gold as a strategic asset. You've got people who are looking for the safe haven nature, but you've also seen more interest in momentum trading, speculation around the asset. Because it's a liquid asset in a large global market, there's a lot more people who are now involved in the gold market.

“The interest level is very high, and I think that those types of investment activities will lead to a higher level of volatility and sustained level of volatility. But people should just understand that and not be concerned about it. It's just something to understand.”

The changing nature of the marginal buyer has been a point of discussion over the last couple of years.

“If you go back to the beginnings of the gold price strength, back in 2024 the story was very much about central bank buying. It was about physical buying of gold for investment in jewellery from emerging markets, and that really was the story for the next 12 to 18 months.  But the return of investment and speculation, particularly from the West, has changed the nature of the market,” Reade noted.

Investors should be aware, he pointed out, that gold will attract speculative flows when it is trending for higher, which has been evident in the last six months. While that does not change gold’s fundamental value, rapid price increases and abrupt sell-offs are likely.