Heightened threats of military action against Iran have triggered severe volatility across global financial markets. Strong rhetoric from US President Donald Trump, coupled with rising military activity in the Middle East, has pushed investor uncertainty to extreme levels. As a result, international markets on Thursday (January 29) saw gold and oil prices surge to record highs, while major stock markets around the world suffered sharp declines.
Gold, long regarded as a safe-haven asset, surged past the historic milestone of $5,500 per ounce for the first time ever. At one point during trading, prices peaked at $5,588.71 per ounce. Earlier this week, on Monday (January 26), gold had already crossed the $5,100 mark for the first time.
Silver prices also climbed to a fresh all-time high. Market analysts attribute the unprecedented rally in precious metals to three key factors: escalating geopolitical tensions, investors’ growing risk aversion, and the relative weakness of the US dollar.
The mounting tensions surrounding Iran have also rattled global energy markets. Oil prices continued their upward trajectory, with US benchmark WTI crude reaching its highest level since September, while Brent crude rose to its strongest level since August. Analysts say fears of potential disruptions to oil supplies from the Middle East are the primary driver behind the surge.
Amid the escalating crisis, President Trump urged Iran to enter talks in a post on his social media platform, Truth Social. He said an immediate agreement was needed over Tehran’s nuclear program, while warning that failure to reach a deal could result in far more devastating military action. Reflecting the seriousness of the situation, the United States has deployed a major naval task force to Middle Eastern waters, led by the aircraft carrier USS Abraham Lincoln.
Global market anxiety has spilled over into equities. Asian stock markets recorded sharp losses on Thursday, with major indices in Tokyo, Hong Kong, Shanghai, Sydney, and Seoul all closing lower. Indonesia’s Jakarta stock exchange plunged nearly 8 percent, extending losses from the previous trading session.
The US dollar has also come under pressure against other major currencies. While US Treasury Secretary Scott Bessent told CNBC that Washington remains committed to a strong-dollar policy, President Trump had commented a day earlier that the dollar was “doing fine” despite its recent weakness.
Against this backdrop, investors are increasingly focused on the future leadership of the US Federal Reserve. Analysts Matthias Scheiber and Rushabh Amin of Allspring Global Investments said in a joint commentary that market attention has now shifted to who President Trump will nominate as the next Fed chair, as current chairman Jerome Powell’s term is set to expire in May.
They noted that while the race remains open, market expectations lean toward the appointment of a more dovish candidate, potentially replacing Powell. Such a move could intensify government pressure on the Federal Reserve to cut interest rates throughout the year.
Meanwhile, market strategist Stephen Innes said the extraordinary surge in gold prices reflects deeper structural concerns rather than geopolitical risk alone. He noted that once gold breached the $5,500 threshold during early Asian trading, it ceased behaving like a conventional commodity.
“Gold is essentially the inverse of confidence,” Innes explained. “When trust in policymaking erodes, gold no longer functions merely as a hedge—it becomes an alternative asset.” He added that the current rally reflects not so much fears of recession as growing skepticism toward the stability of fiat currency systems.
Source: AFP.