Gold’s Rally: Geopolitical Tensions, Fed Signals, and Tether’s Bold Investment

Ved Shah

The Israel-Iran conflict fuelled safe haven demand for gold this week, with the metal’s price increasing across both countries. In the U.S, gold finally crossed US$3,400, closing at US$3,425.7 on Friday, a 3.08% increase. Meanwhile in Australia, gold surged 4.30% this week to A$5,302.95, crossing the A$5,300 mark after nearly 2 months. However, analysts are skeptical about forecasting all-time highs for next week, as rallies driven by geopolitical events have historically proven to be short-lived, subject to no further escalation.

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets stressed the importance of monitoring oil prices and potential Iranian retaliation. He stated that if Iran retaliates forcefully, especially by threatening oil flows to the Strait of Hormuz, surging crude prices could trigger a sharp flight to safety, which could soar gold prices as investors hedge against geopolitical risk. However, he mentioned if the escalation remains limited and oil retreats, gold’s rally could be extremely short-lived as safe haven demand would unwind.

Moreover, the market will also closely monitor the actions of the Federal Reserve, with Chairman Jeremy Powell set to speak at next week’s monetary policy meeting. Though economists expect the interest rates to remain unchanged, it is speculated that Jeremy Powell may start laying the groundwork for rate cuts later this year. Analysts expect that should the Fed sound more dovish than expected following the latest inflation print, it could push gold prices past US$3,500, especially with ongoing geopolitical support. However, if the meeting has a hawkish tone and Powell expresses caution over future cuts, it could lead to a correction of gold prices as investors scale back Fed cut bets.

Here at GoldHub Australia, our Managing Partner, Brian Chu, believes that the Israel-Iran conflict may de-escalate quicker than what the media is portraying. The key reason is that the US has declined Israel’s request for military support. Historically, regional conflicts escalate because the allies of the countries involved weigh in militarily, leading to conflicts spreading to more countries. While some fear that the two countries could spark a world war because of the potential for nuclear missile exchanges, Brian believes that these fears are overhyped. The two countries may vent their anger for a short period before the tensions die down. The consequence of this could be a pullback of gold and oil to levels seen earlier in the week.

Meanwhile, the ASX-All Ordinaries Gold Index has also benefited, climbing a significant 753 points this week. The index particularly benefited from a strong bid for gold miners like Northern Star Resources, Evolution Mining, Ramelius Resources, Catalyst Metals etc. who have all climbed up 5-6% on the ASX since earlier this week.

Figure 1: ASX All Ordinaries Gold Index Movements this week (Source: GoldHub Australia)

The more exciting developments were with the explorers and early-stage developers as more companies started enjoying more buying interest. Some are taking this opportunity to raise capital to replenish their balance sheet and accelerate exploration and development. Silver explorer, Investigator Resources, halted trading to raise $4.3 million in share placement at 3 cents plus an options offer. This coincides with the strength of silver, which ended the week at US$36.08 an ounce.

Lastly, in a significant development at the intersection of crypto and commodities, Tether has invested approximately $89 million to acquire a 32% stake in Elemental Altus Royalties, a gold and metals royalty firm. This move signals a growing institutional appetite for blending traditional assets like gold with decentralized finance models. By targeting a royalty business—which offers steady exposure to mining revenues without operational risk—Tether appears to be diversifying its reserves and exploring future opportunities in tokenizing royalty cash flows. This not only validates gold as a strategic reserve asset but also hints at evolving models where physical resource returns could be digitized and integrated into blockchain-based financial ecosystems. The investment underscores a broader shift in how institutional players perceive value, security, and diversification across both tangible and digital realms. For investors such as yourself eyeing gold, this signals not just renewed institutional confidence, but also emerging opportunities to access gold through innovative, yield-generating and potentially tokenised structures, and reinforces gold’s evolving role as both a safe-haven and a modern, strategic investment asset.