Why gold prices have remained steady despite the war on Iran

Gold, traditionally seen as a "safe-haven" asset that rises during crises, has remained steady at around $5,000 per ounce since the outbreak of the war on Iran on February 28, 2026.

The conflict, involving strikes by the United States and Israel, has pushed oil prices above $100 per barrel following the closure of the Strait of Hormuz, say Al Jazeera.

Ebrahim Jabari, senior adviser to the commander-in-chief of Iran's Islamic Revolutionary Guard Corps, announced on March 2 that the strait was "closed." Despite this disruption and declining stock markets, gold has not shown the usual surge seen in past conflicts.

Typically, gold prices "skyrocketed" following Russia's invasion of Ukraine. Remi Bourgeot, economist at the French Institute for International and Strategic Affairs, said the 2022 invasion created "a wave of panic" among central banks and "completely changed the dynamic behind gold prices."

Reflecting on the current situation, he noted gold is "not seen as much of a hedge against the uncertainty as it was two years ago" and added, "I think there's really a great deal of understanding at this point that gold has become a very speculative asset," with risk-averse investors likely "spooked" by recent volatility.

Several factors are cited for the muted reaction:

• Federal Reserve and interest rates: Traders anticipate that the US Federal Reserve may halt interest rate cuts or even raise rates to combat inflation caused by high oil prices. James Meadway, council member of the Progressive Economy Forum, said: "That makes dollar assets more attractive and gold, which pays no interest, less so."

• A strong US dollar: Because gold is traded in dollars, a strengthening dollar makes it more expensive for international investors. Rebecca Christie, senior fellow at the Bruegel think tank, noted: "There are other factors in play: because the dollar has strengthened, and because gold is traded in dollars, it may be harder for interested investors to push the price up." She added, "Also, a rising dollar provides an alternative safe-haven choice, and higher oil prices probably will lead to higher inflation, which also will make the dollar more attractive."

• Previous record highs: Gold was already trading at historic levels before the war began. Christie commented: "For now, it seems like the biggest thing holding gold back from rising further is because it has already risen so much." Meadway also noted, "Gold had risen so much before that it is reacting less now to the war."

• Speculative volatility: Bourgeot argued that gold has become a "very speculative asset," which has "spooked" traditionally risk-averse investors such as central banks.

The future of gold prices depends on Federal Reserve policy and perceptions of the war's duration. Meadway said: "First would be a clear indication from the Federal Reserve... that interest rates may be cut further, despite inflationary pressure. The second would be a change in perception as to the length of the war; at present, there is still some belief this will be ended fairly quickly, but the longer this drags on, and the more the damage spreads, the more attractive gold will start to appear."

For a significant price shift to occur, experts say the market would likely need both a signal of Fed action and evidence that the conflict will be prolonged.