US-Israel War with Iran Expected to Drive Safe Haven Asset Demand, Will Gold Prices Rise Further?
Heightened conflict in the Middle East stemming from US-Israel military operations against Iran, met with retaliatory strikes from Tehran, is expected to drive increased demand for safe-haven assets among investors. Market participants are anticipated to redirect funds towards low-risk assets, including government bonds and gold.
According to Bloomberg, analysts expect that in the coming trading session, market participants will focus on the conflict’s impact on energy markets. Volatility is forecast to intensify as tensions escalate. Consequently, investment managers are likely to reallocate assets away from equity markets.
John Briggs, Head of US Interest Rate Strategy at Natixis, predicts that markets will increasingly adopt strategies to protect their investment assets. Iran’s retaliatory strikes are viewed as more substantial than market expectations had suggested.
He anticipates that US government bonds will continue their recent trend on Friday, with short-term yields falling to their lowest levels since 2022.
“The scale of Iran’s attacks and counter-attacks has exceeded market expectations,” he said on Sunday, 1 March 2026.
Similarly, Ed Al-Hussainy, Portfolio Manager at Columbia Threadneedle Investments, explains that excessive valuations across nearly all global equities and credit are making it increasingly convenient for investors to reduce equity market exposure.
Furthermore, markets had previously been anxious about shifts in US tariff policy towards several trading partners. Additionally, recent market sentiment has been wary regarding artificial intelligence disruption and private credit pressures.
“The extent to which de-risking will occur remains uncertain,” Al-Hussainy said.
Market concerns regarding military action in the Middle East were already evident during Friday’s trading (27 February 2026), when Brent crude oil closed at its highest price since July and the S&P 500 declined 0.4%.
Similarly, Saudi Arabia’s Tadawul All Share Index opened down nearly 5% before recovering much of its losses during Sunday’s trading (1 March 2026).
Meanwhile, Bitcoin traded in the region of US$68,000. Data from Derbit shows that put options on the cryptocurrency worth US$1.87 billion are concentrated at the $60,000 level, indicating persistent demand for downside protection.
Strategist Ajay Rajadhyaksha at Barclays Plc warns investors against rushing to purchase during price declines, arguing that current conditions appear different.
He emphasises potential American casualties, attacks on Iranian leadership, and disruptions to shipping through the Strait of Hormuz.
“The current risk-reward ratio does not appear attractive. If equities decline sufficiently—more than 10% on the S&P 500—it may be time to buy. However, not yet,” he stated.
Meanwhile, Dave Mazza from Roundhill Financial emphasises the risks that could materialise should Iran close the Strait of Hormuz as a retaliatory measure. He explains that the waterway is crucial for global oil trade, as approximately one-quarter of the world’s seaborne oil trade passes through it.
“This is about Strait of Hormuz risk, not merely retaliation. If the shipping route remains open, equity markets may endure. If not, all scenarios could change,” he said.