Why Hasn't the Iran War Affected Gold Prices?
Gold prices have remained largely unchanged since the outbreak of the recent Iran war, even though geopolitical turmoil typically drives investors toward safe havens.
Gold rose from $5,296 to $5,423 an ounce after the US and Israeli strikes on Iran on February 28, but then fell more than 6% to $5,085 on March 3.
Since then, it has traded between $5,050 and $5,200, finally settling at $5,175 an ounce, according to a CNBC report on Thursday, March 12.
Reasons for the Lack of Momentum
Ross Norman, CEO of Metals Daily, explained that the strength of the dollar and rising US Treasury yields are limiting gold's gains. He also noted that rising oil prices could prolong inflation and prompt central banks to raise interest rates.
He emphasized that yield-generating assets become more attractive compared to non-yielding gold.
Market Volatility
Norman said, "Gold and silver price movements appear subdued at the moment, but this is perhaps normal after the strong rallies of recent months," adding that some institutional investors have become hesitant to hold gold due to its unusual volatility.
Widespread Selling
Amer Halawi, head of research at Al Ramz, explained that conflicts often lead to panic selling among investors, as traders are forced to abandon their positions when prices fall.
He added, "Traditionally, when a shock occurs, even gold is sold off and then recovers later."
Banks' Outlook
Despite the short-term volatility, banking forecasts remain positive. JPMorgan expects gold to reach $6,300 per ounce by the end of 2026, while Deutsche Bank maintained its target of $6,000 per ounce.
