"Iran Hot War" drives gold prices higher, causing another wave in the gold sector?

“Sound of cannons, gold worth ten thousand taels,” the U.S. and Israel suddenly launched a surprise attack on Iran, reigniting conflict in the Middle East. As a result, according to Golden Eye Data, international dark gold prices temporarily exceeded 1,230 yuan/gram, rising over 4%, just shy of a new high by less than 30 yuan, before quickly retreating to erase the gains.

Zhitong Finance APP learned that on February 28, the U.S. and Israel announced they had launched strikes against Iran from the air and sea. Subsequently, Iran retaliated against Israeli and U.S. military targets in the Middle East. Influenced by this event, both gold and oil dark markets surged sharply, with international dark gold breaking above 1,230 yuan/gram before quickly falling back. By March 1, prices had retreated to around 1,170 yuan/gram. Notably, since the Spring Festival, gold prices have rebounded with a gain of 10%.

Recently, gold prices have risen mainly due to Trump’s policies. On one hand, U.S. pressure on Iran has continued to escalate, with the largest military deployments in the Middle East since the 2003 Iraq War, and the sudden surprise attack accelerated the rise. On the other hand, “tariff policies” have stirred markets; Trump recently announced a 15% tariff on imported goods worldwide, increasing investor demand for safe-haven assets like precious metals.

Most investment banks remain bullish on the outlook. China Everbright Securities stated that amid ongoing uncertainties in U.S. tariff policies and Middle East geopolitical tensions, they maintain a positive view on gold prices for the year. If the Federal Reserve continues to cut interest rates in the second half of the year, and political uncertainties between the U.S. and other countries persist, these factors could support further gains in gold prices. Zhang Dexi, Chairman of the Hong Kong Gold Exchange, predicts that after slight adjustments, gold prices will rise again, with the second and third quarters of this year potentially challenging the $6,000 per ounce level.

Driven by investment, gold is in a long-term bull market, while Middle East tensions cause short-term spikes

Fundamentally, prices are determined by supply and demand. Gold is a strategic asset, with physical demand mainly for jewelry and decorative items, which accounts for a relatively small proportion. Its value storage and safe-haven attributes make investment demand the dominant factor, which is the main driver of gold price movements.

According to research reports from investment banks, gold demand can be divided into four main dimensions: jewelry accounts for 29%, technological demand 6%, while investment and central bank gold purchases account for 43% and 21%, respectively—nearly 70% combined. Clearly, investment demand has driven the sustained rise in gold prices. Notably, central banks have been net buyers of gold, accumulating over 1,000 tons annually on average over the past four years, with continued increases since 2024.

Data from Trading Economics released on January 27 shows that by January 2026, among the top ten countries holding gold reserves, the U.S., Germany, Italy, France, Russia, and China rank highest, with reserves of 8,133 tons, 3,350 tons, 2,452 tons, 2,437 tons, 2,330 tons, and 2,306 tons respectively. Continuous accumulation, combined with secondary market investment resonance, has driven gold prices to new highs, with accelerated growth expected in 2025, surpassing a 60% increase.

Investment demand is mainly for risk hedging. Historically, every price increase has been accompanied by a decline in the U.S. dollar index, Fed rate cuts, expanding U.S. government debt, and rising geopolitical risks—all factors that heighten demand for safe-haven assets like gold. In recent years, conflicts involving Russia and Ukraine, Middle East tensions, and U.S. policies under Trump have continually boosted global safe-haven investment demand. Coupled with inflation, these factors have propelled gold prices upward. The recent U.S.-Israel attack on Iran and escalating Middle East conflict threaten to plunge the region into full-scale war, likely pushing gold prices higher once again.

From an investment allocation perspective, since the collapse of the U.S. gold standard in 1971, gold priced in dollars has seen an annualized increase of 9%, outperforming other assets. Whether during economic booms or recessions, gold has provided long-term positive returns, thanks to its diversified demand sources and resilience under various market conditions. During economic uncertainty, counter-cyclical investment demand drives prices higher; during expansion, pro-cyclical consumer demand supports gains.

Currently, after a deep correction earlier this year, gold prices have largely shaken out short-term profit-taking and hedging positions. The rebound during the Spring Festival has raised the entry cost for new long investors, establishing a new support level. However, gold has reached a key resistance at previous highs. Media reports suggest that the conflict between Iran, the U.S., and Israel may continue for weeks, providing strong support for further upward movement, potentially forming an N-shaped trend.

It’s worth noting that rising gold prices may suppress physical demand (jewelry), but since this demand is a smaller proportion, the overall impact is limited. The bullish outlook on gold prices will also create significant investment opportunities across the gold industry chain, especially upstream gold mines.

Strong bullish outlook, focus on quality gold mining stocks

The ongoing weekend developments of the U.S.-Israel attack, Iran’s multiple retaliations, and escalating Middle East tensions suggest that gold sector stocks may see movement on March 2. Among them, gold mining companies are likely to benefit first, with leaders like Zijin Mining (02899), Zijin Gold International (02259), Zhaojin Mining (01818), and Chifeng Gold (06693) expected to attract capital.

Zijin Mining covers precious and non-ferrous metals, maintaining a strong market position. Its copper reserves and production rank in the top five globally, while its gold reserves and production are sixth worldwide, leading in China. The company achieved a total mineral gold output of 90 tons in 2025, exceeding the initial guidance of 85 tons. Its 2026 plan targets 105 tons, with a long-term goal of 130–140 tons by 2028, maintaining growth. The company’s market value increased by over 1.6 times in 2025, with a year-to-date gain of over 26%.

Zijin Gold International, spun off from Zijin Mining, is its core gold asset with excellent performance. From 2022 to 2024, its compound annual growth rate (CAGR) of gold production reached 21.4%, maintaining double-digit growth in 2025. Gold production in 2025 is expected to be 46.5 tons, over half of Zijin International’s total, with a 2026 target of 57 tons. Revenue from 2023 to 2025 grew at an average rate of over 30%, with net profit more than doubling. According to forecasts, full-year net profit will reach $1.5–1.6 billion, up 212–233% year-on-year.

Recently, Zijin Gold International announced plans to acquire all issued common shares of United Gold at CAD 44 per share, attracting attention. Key assets include the Sadiola gold mine in Mali, the Bonikro and Agbaou gold mines in Côte d’Ivoire, and the Kurmuk gold mine in Ethiopia, expected to start production in late 2026. This acquisition will significantly boost the company’s gold output, with continued high performance expected amid rising gold prices. The company listed in September 2025, with a monthly closing trend, and its current price has increased 2.26 times from the issue price, with a market cap of HKD 625.73 billion.

Chifeng Gold owns and operates six gold mines with total resources of 390 tons. Through technological upgrades and acquisitions, its gold production has steadily increased to 15–16 tons, with about 70–80% from overseas mines, smaller than Zijin’s scale. The company is advancing multiple upgrade projects, including the Sibin gold-copper mine, which plans to increase annual gold output to 7 tons by 2027, and the Wasa gold mine, which aims for 6.2–7.8 tons by 2028, with long-term capacity reaching 7.8–10.9 tons.

The company’s performance is also strong, with high growth in revenue and net profit. According to forecasts, net profit in 2025 will reach 3–3.2 billion yuan, up 75–86% year-on-year, after a 119% increase in 2024. Chifeng Gold listed on the Hong Kong stock market in March 2025, with a subsequent upward trend. Its current price has risen 1.89 times from the issue price, with a market cap of HKD 75.37 billion.

Overall, gold prices are mainly driven by investment. Historical patterns show that under the influence of safe-haven demand, inflation, and geopolitical conflicts, gold has experienced a long-term bull trend, largely ignoring economic cycles. The recent U.S.-Israel attack and Middle East tensions are likely to accelerate this trend in the short term. With bullish expectations, the gold mining sector will continue to rise, and investors can focus on quality Hong Kong-listed gold stocks such as Zijin Mining, Zijin Gold International, Zhaojin Mining, and Chifeng Gold.