The Iranian rial tumbled to an all-time low against the US dollar on Sunday, with the open-market rate breaching 195,000 tomans for the first time, according to multiple Tehran-based financial data providers. The move triggered immediate jumps in domestic gold and coin prices: the benchmark Emami gold coin traded between 190 million and 191.5 million tomans, while 18-karat gold rose to around 19 million tomans per gram. The surge came even as global spot gold settled at $4,018 per ounce on Friday, down 2.6 percent for the week—its worst weekly performance in six weeks.

The depreciation is directly linked to a sharp escalation in military hostilities between the United States and Iran. Over the weekend, Washington expanded strikes on Iranian infrastructure, and Tehran retaliated with attacks on American bases across the Middle East, including a missile strike on Jordan that killed two US service members. The US has also imposed a naval blockade, tightening economic pressure. Viewed from Tehran, these developments have extinguished any remaining expectations of a diplomatic off-ramp, prompting a flight from the rial into hard assets.

Tehran’s gold market is moving in the opposite direction from international benchmarks. A strong US dollar and expectations that the Federal Reserve will keep interest rates elevated to counter energy-driven inflation have weighed on bullion globally. In Iran, however, the exchange rate dominates the pricing equation. The rial’s collapse has more than offset the decline in the dollar-denominated gold price, pushing local gold to within striking distance of its record set in early March, when the Emami coin briefly touched 210 million tomans.

Market participants in the Iranian capital report that trading volumes remain thin despite the price spikes. Demand has been dampened by the onset of the religious months of Muharram and Safar, and there is no sign of panic buying. Nader Bazarafshan, head of the Tehran gold and jewellery union, told state-linked media that the market is calm and that the central bank’s management of the foreign-exchange market will be decisive. He noted that if the central bank can increase dollar supply and bring down the exchange rate, gold and coin prices could stabilise or even fall, given the soft global backdrop.

The immediate focus is on whether the Central Bank of Iran will intervene more aggressively in the currency market and on the trajectory of military operations. Global markets reopen on Monday, and any further spike in oil prices—Brent crude surged 16 percent last week, according to regional energy analysts—could reinforce inflation fears and complicate the Federal Reserve’s policy path, indirectly affecting gold. Domestically, the rial’s direction hinges on the intensity of the conflict and any sign of renewed diplomacy.