Reasons why gold prices did not rise but fell after the US-Iran conflict

After the attacks on Iran by the United States and Israel, gold prices have remained weak. Previously, gold—regarded as a “safe-haven asset”—would be bought in when geopolitical risk rose. Some analysts believe that, in addition to the headwinds from a stronger U.S. dollar and rising interest rates, another reason for the weak price performance is that volatility in financial markets has increased rapidly, leading investors to sell gold to recoup losses.

On March 11, the New York futures contract (front-month contract), the international benchmark for gold, was around $5,170 per ounce, down more than 1% from before the U.S.-Iran conflict. Although prices rose on March 2 after the conflict broke out, they fell sharply on March 3, and then never returned to pre-conflict levels. Gold has tracked the performance of the Dow Jones Industrial Average and has not become a safe haven for funds amid the emergency.

When Russia attacked Ukraine in February 2022, gold rose by 4% on the 8th business day after the offensive began.

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