Iran, hit by high inflation and threatened by Trump, seeks comfort in gold; imports triple in a year

Iran is turning increasingly to gold as citizens and businesses seek refuge from soaring inflation and escalating geopolitical tensions, particularly threats from former US President Donald Trump’s administration.

Local gold prices surged more than 80 per cent in Iranian rial terms over the past year, significantly outpacing the global benchmark’s increase of 45 per cent.

The West Asian nation imported a record 100 tons of gold valued at about $8 billion in the financial year ending in late March, tripling its previous annual imports, according to government data. The actual figure could be nearly double, with substantial amounts coming from neighbouring markets like the United Arab Emirates and Turkey, according to analysts cited by Financial Times.

Sanctions spurring gold accumulation

Analysts link this sharp rise to Iranians investing in gold to protect their savings amid economic instability, sanctions, and the looming threat of military confrontation with the United States and Israel.

The Central Bank of Iran has reportedly accumulated large gold reserves, potentially at historic levels, as a buffer against future sanctions. While the central bank has not publicly commented, an economist familiar with the matter said, “No one in the world can stop Iran from importing gold[…]The global gold market is opaque. Gold takes up little space and much of it arrives through neighbouring countries.”

More from World

Operation Sindoor: Opposition playing into the hands of foreign lobbies US imposes new Iran-related sanctions on 37 individuals and entities, including UAE firms

Demand high despite price volatility

Price volatility has occasionally impacted investors, with gold coin prices briefly exceeding IR1 billion ($2,200) in March before retreating following the resumption of nuclear talks with the US, which briefly raised hopes for sanctions relief.

Nonetheless, demand for gold remains robust due to considerable challenges impeding a nuclear agreement. US officials continue demanding that Iran halt uranium enrichment, a stance Tehran firmly rejects. Trump’s ongoing “maximum pressure” policy, combined with threats of additional sanctions targeting Iran’s crucial oil exports, further fuels economic uncertainty.

Many Iranians reportedly keep their savings in gold and US dollars at home, avoiding banks due to fears of financial instability or government confiscation. “It’s like wine that just sits in storage,” FT quoted Mohammad Keshtyaray, a member of Iran’s Gold and Jewelry Special Committee, as saying.

Gold for weapons?

Additionally, gold transactions help Iran circumvent international sanctions. US analysts from C4ADS, as reported by The Washington Post earlier, revealed that Russia transferred 1.8 tons of gold bars worth approximately $104 million to Iran as payment for Shahed-136 drones.

Further gold transactions between Russia and Iran are reportedly planned, though details remain unclear.