Middle East tensions: Gold prices jump 2% on Iran conflict; India braces for diamond supply crunch
Times of India
by TOI BUSINESS DESKMarch 2, 2026
AI-Generated Deep Dive Summary
Gold prices surged to their highest level in over four weeks after US and Israeli strikes on Iran, including the killing of Tehran’s Supreme Leader Ayatollah Ali Khamenei. The escalation in tensions has triggered fears of prolonged instability in the Middle East, creating a volatile environment for global markets. Spot gold rose 1.72% to $5,368.09 an ounce, while US gold futures climbed even higher at 2.58% to $5,382.60 per ounce. Analysts note that the conflict’s potential escalation adds significant uncertainty, making gold a more attractive safe-haven asset.
The geopolitical turmoil has also reignited concerns about inflation and economic instability, with US producer prices showing unexpected growth in January. This suggests that inflation may intensify further, prompting investors to seek refuge in precious metals. Gold has already reached successive record highs this year, driven by central bank buying, ETF inflows, and expectations of easing US monetary policy. Experts predict gold could reach $6,000 or higher in the coming years.
Amid these developments, India faces a potential diamond supply crunch as Middle East tensions disrupt trade routes through Dubai, a key hub for its bullion and gemstone imports. Roughly 50–60% of India’s gold imports pass through Dubai, which is also the primary source of rough diamonds for its polishing industry. With supply routes under strain, delays and price hikes could ripple across the domestic market, affecting both gold availability and polished diamond production.
This situation underscores how global geopolitical events can have far-reaching economic consequences, not just for financial markets but also for everyday consumers in countries like India. As tensions continue to escalate, the impact on trade, prices, and regional stability will remain a critical focus for investors and businesses worldwide.
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Originally published on Times of India on 3/2/2026