The gold market is now worth $30-35 trillion to the economy. Even if the GDP of India and Britain are combined, it will be bigger. Because of the Iran war, investors are investing in the world’s oldest and safest metal. This has intensified following US-backed Israeli attacks on Iran and Tehran’s retaliatory attacks across the region, sending global markets into turmoil and investors flocking to bullion.
prices rose sharply
International gold benchmarks have climbed above $5,400 an ounce and are near record levels of $5,600. This has further increased the already several years of bullishness due to central bank buying and fear of inflation after the pandemic. With the surge in prices, the total value of gold held underground has reached $30-35 trillion, making the metal’s estimated economic impact greater than the combined production of India and the UK, which is about $8-9 trillion.
Which way is gold going?
Gold has just broken out of a 13-year trading base, similar to the big launches in 1972 and 2005 that lasted six to eight years. After a decade of sideways movement, it has also started outperforming both stocks and the classic 60/40 portfolio. The war has essentially created what some analysts call a “financial superpower” in bullion, a huge store of wealth that grows as geopolitical risks increase.
global markets shake
Markets are reacting in real time. Every escalation headline—a missile attack in the Gulf, a threat to close the Strait of Hormuz, or attacks on energy infrastructure—has triggered a selloff in cyclical equities and new inflows into gold. The major conflict has also jolted commodities, sending oil prices skyrocketing and global stock markets tumbling.
Investors now consider gold the greatest hedge in a world where war, inflation and debt risks are colliding. The effect of this change is clear. India has spent a decade doubling its economy and aims to cross $5 trillion in GDP, while Britain is at about $3 trillion. On the contrary, the valuation of gold is now much higher than both. It’s just a fixed global stock of metal whose price is rising due to fear, not factories, workers or elections.
Why are analysts divided?
However, analysts are divided on whether this “gold superpower” moment will last. A reduction in the Iran conflict, stronger growth, or higher real interest rates could lead to a correction. Others argue that structural forces, such as central-bank accumulation, chronic geopolitical tensions, and growing confidence in fiat currencies, will keep bullion strong as a system-level asset.
