What does the Middle East conflict mean for gold prices?

Gold prices have fallen sharply since the outbreak of the Iran war, dropping more than 16% from their late February highs

 
As gold has historically risen during periods of conflict, but the current Middle East crisis has produced the opposite result, Rick Kanda, Managing Director at The Gold Bullion Company, explains what this conflict could mean for prices.

Why has gold fallen during a major geopolitical conflict?

“Gold is usually seen as a safe haven during times of uncertainty, so the decline has caught many people off guard. But there are specific reasons why this conflict is different. The war has pushed oil prices significantly higher, with Brent Crude up around 75% this year. Because the US is a net oil exporter, that has actually strengthened the dollar, and a stronger dollar puts downward pressure on gold, which is priced in dollars.

“On top of that, higher oil prices are feeding into inflation expectations. The Bank of England held rates at 3.75% on 19 March when markets had previously expected a cut, and the US Federal Reserve is now signalling just one rate cut this year.”

Should you invest in gold during times of global tensions?

“Historically, global geopolitical tensions and trade uncertainty have put the price of gold in a strong position. Even though there has been a more recent drop, the price of gold did, however, rise 16.3% in 2026 through to 13th March, continuing its strong performance from 2025.1  Many people see this as confirmation that gold prices can continue to rise in the current geopolitical and economic climate.”

“With that said, gold investment should not be dependent on whether the market is either surging or falling; you should be more focused on whether your financial situation enables you to do so at that particular time. Gold should always be seen as a long-term investment strategy. The time is right if you have the funds, you are in a financially stable position, and you’re looking for an investment that will store value long-term without thought towards any short-term price fluctuations.”

Are gold prices expected to rise as the Middle East conflict continues?

“I suspect we’ll continue to see ebbs and flows, but for now, the stronger dollar and elevated oil prices are creating some headwinds for gold, even as prices remain near record highs. How long those pressures persist will depend largely on the trajectory of the conflict and its knock-on effects on inflation and interest rate expectations.”

“Gold should not be looked at as an asset you react to impulsively. Remember that gold is a long-term investment, not a short-term trade, and market fluctuations are a natural part of the cycle, not a reason to panic. If you have invested in gold for the right reasons, which are long-term financial storage, short-term declines in the market should not hurt your confidence.”

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