The precious metal gained more than 1%, surpassing $5,380 per ounce earlier, extending gains of over 3% recorded in the previous four sessions as the regional conflict spread.

U.S. President Donald Trump said the United States would continue its military operation “for as long as it takes,” while Israel announced a “wave of attacks” targeting Iranian command centers. Tehran responded by striking oil and gas facilities and threatening shipping through the strategically vital Strait of Hormuz.

The ensuing surge in energy prices reignited concerns about inflation in the United States, pushing U.S. government bonds lower and increasing the likelihood that the Federal Reserve will keep interest rates unchanged for a longer period.

Markets are now pricing in a rate cut in September, later than previously expected. While higher interest rates typically reduce gold’s appeal — as it does not yield interest — they also reinforce its role as a store of value during periods of uncertainty.

Gold has gained nearly 25% since the start of the year, supported by persistent geopolitical and trade tensions, as well as concerns over the Federal Reserve’s independence. The broader shift away from bonds and currencies — the so-called “currency debasement strategy” — has given fresh momentum to a multi-year rally.

There is “significant room” for gold to retest its record high above $5,595 per ounce, reached in late January, if the Middle East conflict continues for several more weeks, according to an analysis by Union Bancaire Privée. On Monday, the metal closed at its highest level in a month.