Gold Prices Remain Subdued Amidst Ongoing Iran Conflict
Gold prices have shown limited reaction to the escalating conflict between the U.S., Israel and Iran, a departure from historical trends where geopolitical turmoil typically drives investors towards safe-haven assets. Although a brief surge occurred following the initial strikes on Iran on February 28, prices have since stabilized and even declined, presenting a puzzling dynamic for investors.
Initial Surge and Subsequent Decline
Gold prices initially rose from $5,296 to $5,423 per troy ounce after the U.S. And Israel launched strikes on Iran, aligning with the expectation that geopolitical instability would boost demand for safe-haven assets. However, a subsequent sell-off saw prices fall by over 6% to $5,085 on March 3. As of March 12, 2026, spot gold is trading between $5,050 and $5,200, last seen at $5,175 per troy ounce.
Factors Dampening Gold’s Appeal
Several factors are contributing to gold’s muted response. A strengthening U.S. Dollar and rising Treasury yields are increasing the relative attractiveness of yielding assets, such as government bonds, compared to non-yielding assets like gold. Ross Norman, CEO of precious metals website Metals Daily, highlighted this dynamic, noting that higher rates tend to favor government bonds over precious metals. CNBC
Rising oil prices, potentially leading to prolonged inflation, also play a role. Central banks may respond to inflationary pressures by raising interest rates, further boosting the appeal of yielding assets. Concerns about a potential closure of the Strait of Hormuz, a critical maritime corridor for oil and gas, are exacerbating these inflationary fears.
Institutional Investor Behavior and Liquidity Concerns
Some institutional investors have become wary of holding bullion due to its recent volatility. Amer Halawi, head of research at Al Ramz, suggests that conflicts can trigger panic selling and a “flush” in the market, forcing traders to sell positions as prices fall. He notes that gold, like other assets, can experience sell-offs during times of shock, followed by a later recovery. CNBC
Future Outlook and Analyst Predictions
Despite the short-term volatility, bank forecasts remain bullish on gold. J.P. Morgan predicts prices will reach $6,300 per ounce by the end of 2026, while Deutsche Bank maintains a $6,000 year-end target.
The Iran Conflict and Decision-Making
The conflict began on February 28, 2026, with a joint U.S.-Israel strike that killed Iran’s Supreme Leader, Ayatollah Ali Khamenei. PBS President Trump has stated that the decision on when to end the war will be a “mutual” one made in conjunction with Israeli Prime Minister Benjamin Netanyahu. The Times of Israel While Netanyahu will have input, Trump will ultimately have the final say. The Times of Israel The White House anticipates the conflict will last four to six weeks. The Times of Israel
As of March 12, 2026, the conflict continues, with Iran responding with missile and drone attacks targeting Israel, regional U.S. Bases, and Gulf nations. ABC News Three more ships have been set afire by “unknown” projectiles in the Persian Gulf. ABC News The war has already cost $11.3 billion in its first six days. ABC News