Gold Price: Why It’s Not Rising With Iran War Fears | Safe Haven Rethink
Gold prices have fallen sharply even as geopolitical tensions surrounding Iran remain elevated, a counterintuitive move that has prompted analysts to reassess the metal’s traditional role as a safe-haven asset. The price of gold has tumbled into what UBS describes as a “bear market,” falling to $2,160 per ounce as of March 25, 2026, despite escalating conflict in the Middle East.
The conventional wisdom dictates that gold should rise during times of geopolitical uncertainty, as investors seek refuge in assets perceived as less risky. However, this hasn’t been the case with the recent flare-up in tensions involving Iran. Several factors are contributing to this disconnect, according to market observers.
One key element is the strength of the U.S. Dollar. A stronger dollar typically weighs on gold prices, as the metal is priced in dollars and becomes more expensive for buyers using other currencies. Reuters reported that the dollar’s recent performance has been a significant factor in the gold sell-off.
expectations regarding the Federal Reserve’s monetary policy are playing a role. If the market anticipates the Fed will maintain higher interest rates for longer, the opportunity cost of holding non-yielding assets like gold increases, diminishing its appeal. CNBC reported that gold prices are steady after a heavy sell-off, but remain sensitive to interest rate expectations.
UBS analysts suggest that the initial surge in gold prices following the outbreak of conflict was overdone and represented a speculative bubble. They now believe the market is entering a consolidation phase, with gold unlikely to experience significant gains in the near term. “We don’t think investors should ditch gold,” a UBS report stated, “but they should adjust their expectations.”
Morningstar Canada highlighted that the market had already priced in a significant risk premium related to the Iran situation. When the actual escalation proved less severe than initially feared, some of that premium unwound, leading to a decline in gold prices. The firm noted that the market’s reaction suggests a reassessment of gold’s “safe-haven” status.
Bloomberg reported that gold’s performance as a hedge against the Iran conflict has been “terrible,” challenging the long-held belief in its protective qualities. The outlet pointed to a lack of sustained upward momentum despite ongoing regional instability.
Exchange Rates Org UK forecasts a further decline in gold prices, projecting a fall to $4,355, citing UBS’s assessment of a consolidation phase. This projection, however, remains significantly higher than current market prices.
Despite the recent downturn, some analysts maintain a long-term bullish outlook for gold, citing concerns about global economic uncertainty and potential inflationary pressures. However, the immediate outlook remains subdued, and investors are cautioned against relying on gold as a guaranteed hedge against geopolitical risk.