Gold Hits New High Amid U.S.–Israel Strikes; UBS Warns on Geopolitical Safety Myths

Gold prices surged at the opening of Asian markets after reports confirmed coordinated U.S. and Israeli military action against Iran’s nuclear infrastructure. Bullion jumped nearly 0.8%, swelling to around $3,400 per ounce, driven by heightened fears of broader Middle East instability .This spike coincided with Iranian missile strikes targeting Israel, which Tehran vowed would be “proportionate and decisive”.

However, market reaction quickly shifted. On June 23, UBS analysts cautioned that gold should primarily serve as a diversification tool, not a direct hedge against geopolitical events. While such conflicts can momentarily lift prices, long-term dynamics—such as fluctuating interest rates and investor sentiment—play a stronger role.

This perspective echoes findings from a recent study by Thomas Kertsos, co-manager of the First Eagle Gold Fund, who recommends allocating 10–15% of a portfolio to gold as a strategic buffer—not as a speculative bet—especially given its resistance to economic cyclicality and geopolitical shocks.

Sources:

“Gold Rises as Iran Pledges Retaliation for U.S. Military Strikes.” Bloomberg, 22 June 2025, www.bloomberg.com/news/articles/2025-06-22/gold-rises-at-the-open-after-us-joins-israeli-attacks-on-iran.

Christensen, Neils. “Investors Should See Gold as a Diversification Tool and Not a Hedge Against Geopolitical Risk Events – UBS.” Kitco, 23 June 2025, www.kitco.com/news/article/2025-06-23/investors-should-see-gold-diversification-tool-and-not-hedge-against.