Iran's gold prices have surged by 80% in a year, with the central bank hoarding gold and the public storing gold, leading to heightened risk aversion

Affected by the risks of the US-Iran nuclear negotiations, gold has become a necessary safe haven, with the Central Bank of Iran, merchants, and the public all hoarding gold, leading to an 80% surge in local gold prices in Iran.

According to CCTV News on Wednesday, the US and other countries will develop a more detailed plan aimed at preventing Iran from developing nuclear weapons while allowing it to obtain the fuel needed for new nuclear power plants. Previously, Trump did not allow Iran to engage in any uranium enrichment activities, while the Iranian foreign minister stated that continuing uranium enrichment activities is Iran's red line.

On Wednesday, June 4th, media reports indicated that Iran's currency, the rial, has been generally depreciating for years due to US and EU sanctions, political conflicts, and inflation, prompting many to rush to buy gold. Merchants buy gold to evade US sanctions, while ordinary citizens purchase gold to preserve value and hedge against risks.

Against the backdrop of global safe-haven funds flowing into gold, demand in Iran has intensified. In the past year, local gold prices in Iran have surged by 80%, rising from 4.01 million rials to 7.35 million, far exceeding the global gold price increase of 45%.

According to official data, Iran imported a record 100 tons of gold worth $8 billion in the year ending March this year, and analysts say the actual figure could be double this number, with most gold bars coming from neighboring markets such as the UAE and Turkey. Iran itself is the fifth-largest consumer of gold coins and bars in the world, and the gold buying spree in Iran is an additional driving force for global gold prices.

The Central Bank of Iran is also hoarding gold, "guerrilla-style" resisting economic blockade

The Central Bank of Iran is also hoarding gold, and analysts point out that to guard against potential future sanctions, the Central Bank of Iran has accumulated a record amount of gold reserves, possibly the highest in history.

Majidreza Hariri, head of the Iran-China Chamber of Commerce, described gold as Iran's "economic weapon":

“If other countries operate their economies like regular armies, we in Iran are like guerrilla fighters.”

“Today we rely on gold, tomorrow on cryptocurrency, and the day after that we might switch to something else.”

An anonymous economist stated:

“No one in the world can stop Iran from importing gold.”

“The gold market is inherently opaque, gold takes up little space, and most of the gold is quietly brought in from neighboring countries.”

Some analysts also warn that the rapid rise in gold prices may have created a bubble. At the end of March, gold prices briefly broke through 10 million rials per piece, but as US-Iran nuclear negotiations began, market expectations of sanctions being lifted led to a price correction, and some Iranian citizens who bought at high prices have already been trapped. However, as the sanction issues remain unresolved, the demand for gold persists. The United States demands that Iran stop its uranium enrichment activities, or it will continue to exert maximum pressure and escalate sanctions. Trump also continues to block Iran's oil exports, which are a major source of Iran's foreign exchange income. Iran has directly rejected this demand and instead continues to increase its stockpile of highly enriched uranium, setting a historical record.

The Rise of Theft Cases in Iran Makes Life Harder for Traditional Gold Artisans

In a traditional market in Tehran, the capital of Iran, a vendor is promoting a hot investment opportunity to passersby: "Your money is dead! Hurry up and buy gold!"

Given the ongoing risks, many Iranians are bypassing the banking system altogether, hoarding gold and US dollars at home. Mohammad Keshtyaray, a member of the Iranian Gold and Jewelry Special Committee, stated:

"Just like wine, keep it untouched."

But this has also led to a wave of home burglaries, with some Iranians discovering that all the jewelry in their bedrooms has been stolen, while other valuables remain untouched, as thieves know that gold is the most valuable target.

Although gold prices have skyrocketed, local goldsmiths and jewelers in Iran are finding it harder to make a living, as the demand for finely crafted jewelry and ornaments has decreased. A gold merchant from the old market in Tehran remarked:

"Isfahan has had a gold market for a thousand years. But the problem now is not that women no longer like gold jewelry, but that they simply cannot afford it."