Gold set to jump as markets reopen after weekend tensions

Dubai: Gold is expected to start the new trading week with a sharp move higher when Asian markets open, with investors leaning into defensive positions after a weekend of heightened geopolitical risk that has pushed traders to reassess where protection sits in portfolios.

Several strategists told Gulf News that the initial reaction is likely to be a gap higher, though the durability of the move will depend on whether buyers continue to treat bullion as a core hedge, or whether early gains fade once the first round of positioning is done.

Mohanad Yakout, senior market analyst at Scope Markets, said the opening tone is likely to be strong, with a specific level acting as the tell on whether markets are shifting beyond short-term hedging.

“Gold is very likely to open with a strong upside gap when Asian markets begin trading, given the intensity of the geopolitical escalation. The key level to watch is $5,600, which represents the previous all-time high and serves as an important psychological barrier.”

He said the price action around that threshold will matter more than the headline move itself.

“If gold briefly trades above that level and then pulls back, it would suggest short-term hedging activity. However, if prices break above $5,600 and remain above it with sustained buying interest, it would signal a more structural shift toward a ‘haven-first’ positioning.”

Other strategists framed the opening move in terms of immediate resistance zones that could define the session.

Michael Brown, senior research strategist at Pepperstone, said the market is primed for a defensive tilt at the open, with two levels likely to draw attention quickly.

“I think it’s pretty clear that gold will gap higher at the open later on today, as participants de-risk and seek a safe haven in reaction to this weekend’s geopolitical events.”

He added, “I’d flag $5,400/oz followed by the late-Jan record high at $5,595/oz as the key levels to watch to the upside.”

Vijay Valecha, chief investment officer at Century Financial, pointed to a slightly lower confirmation band for whether the move becomes more strategic.

“Gold is likely to start Asia trading with a strong jump, reflecting rising geopolitical tensions and a shift toward safer assets. Weekend prices around $5,430, up about $136, show that markets are entering the week more cautiously.”

He said, “If gold stays above $5,450 to $5,500, it would point to a move from short-term hedging to a longer-term safe-haven strategy.”

Early trading in gold often leans on the usual relationships with the US dollar and Treasury yields, though strategists expect the first phase of this move to be driven more by positioning and risk appetite than clean macro correlations.

Yakout said gold can rally even when the dollar is firm during acute shocks, with real yields doing more of the heavy lifting.

“In the first hours of trading, gold’s direction will likely be driven primarily by safe-haven demand rather than traditional correlations.”

He added, “The more important macro factor will be real Treasury yields. If investors rush into bonds and real yields decline, the opportunity cost of holding non-yielding gold falls, making bullion more attractive.”

Charu Chanana, Chief Investment Strategist at Saxo Bank echoed that dynamic and pushed back on the idea that markets must choose between the dollar and gold.

“Safe-haven demand can lift both the US dollar and gold. It’s not either or.”

Valecha also linked the durability of gold’s gains to what happens in real yields once markets start pricing the inflation channel through energy.

“Gold may jump at first due to geopolitical fears, but lasting gains depend on whether real yields fall.”

He added, “If Treasury yields drop while inflation expectations stay high because of rising energy prices, real yields will weaken further, which usually supports gold.”

Beyond spot price action, strategists said flows may offer a cleaner read on whether this turns into a broader reallocation.

Yakout said institutional investors are likely to use ETFs to move quickly at the start of the week.

“Immediate inflows into gold ETFs are highly probable as institutional investors rebalance portfolios in response to heightened risk.”

Valecha expects a similar pattern, particularly from portfolios that adjust risk based on volatility and macro stress.

“Yes, gold ETFs will probably see quick inflows when markets reopen, especially from tactical investors and risk-parity strategies seeking fast exposure to defensive assets.”

A larger shift, several strategists said, comes when the narrative moves from pure risk-off into inflation anxiety tied to energy.

Chanana said, “A bigger shift tends to come if the story morphs from ‘risk-off’ into oil-driven inflation anxiety, because that raises the appeal of gold as a hedge against policy uncertainty and longer-lasting inflation risk, not just market volatility.”

Gold’s pattern during geopolitical shocks often follows a familiar arc, an initial surge, then some give-back once the first wave of fear trades is absorbed. Several strategists expect that risk to remain on the table in the days ahead even if prices open strongly.

Brown cautioned that early extremes can fade once positioning stabilises.

“I’d not be at all surprised to see some degree of any initial spike higher fade as trade progresses.”

He added, “Markets are notoriously terrible at accurately pricing geopolitical risk, with participants tending to flip to an extreme view, before more rational heads slowly but surely prevail.”

Yakout said the durability depends on whether the conflict looks contained or expands into broader and longer-lasting stress.

“Historically, geopolitical shocks tend to produce an initial spike in gold prices followed by consolidation once clearer information emerges.”

He added, “If developments suggest a broader regional war or sustained infrastructure targeting, the initial spike could mark the beginning of a longer-term uptrend.”

Chanana framed the technical tell in terms of holding above the recent peak zone after the first headlines fade.

“Gold is likely to open firmer in Asia given the shock backdrop, but ‘haven-first’ positioning typically looks like a decisive break and hold above the recent peak zone around the low-$5,300s/oz, followed by higher highs even after the first headlines fade.”

Valecha said the difference this time is the combination of geopolitical risk and inflation risk, which can keep gold supported even if the initial panic calms.

“In the past, geopolitical shocks usually cause gold prices to spike right away, then settle down once markets understand the conflict’s scale and duration.”

He added, “The risk is not from a single event but from a possible long-term escalation involving several countries, energy supply routes, and global economic effects.”

Markets will get the first read within hours of the Asia open, with traders watching whether gold can hold above the key zones highlighted by strategists and whether ETF flows confirm that demand is turning strategic, not simply reactive.

- With inputs from agencies.