Gold prices surged to $4,619 intraday on Monday, closing at $4,580, a 1.5% increase marking its highest level in over a week, as investors fled to safe-haven assets following threats by Donald Trump to "blow up and completely obliterate" Iran's Kharg Island, oil wells, and power plants.
Brent crude also climbed to $117 per barrel intraday, a 3.2% increase, contributing to a 59% monthly gain in March 2026, the largest monthly surge recorded since the Gulf War 36 years ago. Silver outperformed gold for the first time since the escalation renewed, rising 3.3% to $72.39, its best session in two weeks, and breaking above $72.
Widening Conflict Threatens Global Energy
The market movements were further influenced by the Houthis' first direct missile strikes on Israel, indicating a widening conflict. PVM Energy's Tamas Varga warned that "$200 oil will not be an otherworldly supposition" if the United States initiates a ground invasion or seizure of Kharg. David Roche of Quantum Strategy cautioned that if both the Red Sea/Bab al-Mandeb and Strait of Hormuz chokepoints close simultaneously, 4–5 million barrels per day could be removed from global markets.
The Houthis' entry into the war, firing missiles at Israel in support of Iran, threatens the Red Sea/Bab al-Mandeb shipping route, an alternative Saudi Arabia has been using to bypass Hormuz. Asian markets, including the Nikkei (−4.6%) and Hang Seng (−1.9%), experienced crashes due to fears of a global stagflation shock, with Japan being particularly exposed as the world's largest net energy importer.
Diplomatic Efforts Stall
Pakistan offered to mediate talks, but Iran rejected the US proposals as "excessive and unreasonable." The market is anticipating further developments, with an Iran deadline 3 days from now on April 6, February PCE data 6 days from now on April 9, and a possible Warsh hearing 10 days from now on April 13.
Market Dynamics Shift to Crisis Mode
Technically, gold's MACD histogram showed compression for the fifth consecutive session, and its RSI was recovering from oversold territory. Gold broke above the Kijun-sen at $4,580, which now acts as support, and tested the Bollinger mid-band at $4,620. Silver's MACD histogram was at its least negative since the war selloff, and its RSI was improving. The gold/silver ratio compressed as silver benefited from both safe-haven demand and a weaker dollar.
Any US military action toward Kharg Island could send oil prices above $150 and gold toward $5,000, while a diplomatic breakthrough could cause oil to collapse by over 20% and gold to retreat to around $4,200. The current market bias is bullish, indicating a shift from rates-driven to crisis-driven dynamics, with a close above $4,620 potentially targeting $4,758.
Why This Matters:
The surge in commodity prices driven by geopolitical threats highlights how military escalation disproportionately harms working families and vulnerable populations worldwide through higher energy and food costs. If oil reaches $150 or $200 per barrel, the resulting inflation would devastate household budgets, particularly for lower-income families who spend a larger share of income on fuel and groceries. The potential closure of critical shipping chokepoints could remove millions of barrels per day from global markets, triggering supply shocks that would ripple through economies already struggling with inequality. Energy-importing nations like Japan face particularly acute risks, underscoring the need for coordinated international diplomacy and investment in renewable energy infrastructure to reduce dependence on volatile fossil fuel markets and protect vulnerable populations from the economic fallout of geopolitical conflict.