A new conflict has erupted in the Middle East. Oil has topped $100 a barrel, and the Strait of Hormuz — a critical chokepoint that handles roughly 20% of global energy flows — is partially closed. Inflation expectations are rising. Yet gold? Mostly it has pulled back.
After U.S. and Israeli strikes on Iran began on February 28, gold briefly spiked above $5,400 per troy ounce, then surrendered much of that gain. To many observers, that feels counterintuitive: when geopolitical risk surges, gold typically benefits. But this behavior is not a market malfunction. It follows a recognizable pattern that has appeared at major turning points in the gold market. Understanding that pattern is useful for any precious-metals investor today.
Why Is Gold Not Going Up During the Iran War?
Three near-term forces are acting as headwinds to gold’s price momentum. None of them undermines the metal’s long-term investment case.
The dollar has strengthened. Oil shocks often lift the U.S. dollar because markets recast energy-driven moves as an inflation threat. That pushes real yields higher and strengthens the currency. Since gold is priced in dollars, a stronger dollar and higher real yields create resistance for bullion in the short run.
Rate-cut expectations have reversed. At the start of 2026 markets priced in multiple Federal Reserve cuts. As expectations shifted toward a more restrictive path, the opportunity cost of holding non-yielding assets like gold rose. Tactical money often rotates out of gold when yields look likely to stay higher for longer.
Momentum trades are unwinding. Gold surged 64% in 2025, its best year since 1979. That rally attracted generalist investors, systematic funds, and retail buyers with shorter horizons. When volatility spiked with the Iran escalation, many of those positions were trimmed to raise cash or rebalance portfolios. That selling pressure is positioning noise, not a judgement on gold’s fundamentals.
Those factors explain the current quiet in the price action, but they don’t change what gold represents or why long-term holders own it.
Has Gold Ever Done This Before?
Yes. Historically, gold has often behaved this way. Gold functions as a hedge against the broader economic fallout wars cause, not necessarily as a direct hedge against active combat. Acute escalation can temporarily depress the price by boosting the dollar, increasing rate expectations, and forcing leveraged holders to liquidate positions.
As UBS’s chief investment officer has pointed out, gold tends to hedge against the wider impact of conflicts rather than direct wartime threats. Similarly, research from major banks after shorter flare-ups last year showed prices commonly move higher on average after a crisis eases, rather than during its most intense phase.
The old adage — buy when the cannons are firing — is apt, but it doesn’t promise immediate price cooperation.
Is It Too Late to Buy Gold?
Many investors ask whether the rally is over and whether they have missed the opportunity. That “missed it” feeling typically appears at the wrong moment: after a big run, when short-term action becomes choppy and the macro picture looks confusing. Those moments have historically preceded further gains.
Even after its recent pullback — the worst weekly decline in over a decade — gold remains positive year-to-date. Measuring from the peak of a spike creates a sense of lateness; measuring from the structural demand floor beneath the market tells a different story. The structural drivers behind this bull run haven’t reversed; they’ve strengthened.
What Is Actually Driving Gold’s Long-Term Bull Case?
Three structural forces continue to support gold’s long-term outlook, none of which hinge on short-term price moves.
Central banks are buying at historic levels. Consensus estimates project central-bank purchases near 800 tonnes in 2026, roughly 26% of annual mine output. These purchases represent multi-year sovereign strategies, not tactical trades, and several previously dormant central banks have returned to the market.
De-dollarization persists. China and other buyers have consistently increased gold holdings month after month. Private investors are adding physical bars and ETF exposure as hedges against longer-term fiscal and currency risk. Many of these positions are “sticky” — they’re structural, not sentiment-driven, and they don’t unwind with the end of a short-term conflict.
Supply growth is limited. Global mine production hit a record in 2025 but grew only modestly year over year. With demand structurally elevated and supply barely expanding, the market tends toward a higher long-term price floor over time.
What Are Wall Street’s Top Banks Forecasting for Gold?
Price weakness has not dented institutional conviction. Major banks continue to project notable upside: J.P. Morgan targets $6,300 per ounce by year-end, Deutsche Bank maintains a $6,000 call, UBS expects $6,200 by September, and Société Générale also sees a $6,000 outcome by December. Those forecasts reflect a consensus view among large institutions that looks beyond short-term volatility.
These banks base their outlooks on long-term drivers such as reserve diversification, monetary debasement, and sustained de-dollarization — forces that are slow-moving and durable. Temporary swings in price do not change those fundamental trends.
If the Case for Gold Is So Strong, Why Isn’t Everyone Buying?
It helps to separate price from value. Short-term price action is often driven by momentum traders, margin calls, and algorithmic strategies. Those forces are obvious and noisy. Long-term value is driven by supply constraints, sovereign accumulation, and currency concerns — quieter but ultimately more consequential.
When prices fall in volatile periods, the move is frequently mechanical: leveraged positions forced to sell overwhelm structural demand temporarily. Physical gold buyers, who hold the metal itself rather than derivatives, sit outside that mechanical selling. Their horizon is years or decades, not weeks.
Analysts describe the current level as fair value given the uncertainty, while also noting meaningful upside if the conflict intensifies or if stagflation forces policy changes. A pullback during heightened geopolitical and monetary risk, with the long-term bull case intact, is an uncommon and noteworthy setup.
The fundamentals remain intact, and the opportunity window for long-term allocation to physical gold is still open.
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People Also Ask
Why isn’t gold going up during the Iran war?
Short-term headwinds — a stronger dollar, rising rate expectations, and momentum-driven unwinds after 2025’s historic rally — are weighing on gold. These are temporary market mechanics. Structural drivers such as central-bank demand, de-dollarization, and constrained supply remain intact.
Is it too late to buy gold in 2026?
Gold remains positive for the year despite a sharp weekly decline, and major institutions maintain bullish targets above $6,000. Feeling late often reflects measuring from a short-term spike rather than from the underlying structural demand that supports this market.
Does gold always go up during wars?
Not immediately. Gold typically prices in the economic consequences of conflict — inflation, currency debasement, and policy shifts — rather than reacting directly to combat. Historically, prices often end up higher after a crisis eases, not necessarily during its peak intensity.
Why is the dollar strong when there’s a war going on?
Energy disruptions raise inflation expectations, which can push real yields higher and increase demand for dollar-denominated safe havens. In the short term, that dynamic can benefit the dollar and create resistance for gold. Over time, however, inflationary consequences from energy shocks often support gold more than the dollar.
What are banks predicting for gold prices in 2026?
Major institutions forecast substantial upside: J.P. Morgan targets $6,300 per ounce by year-end, Deutsche Bank holds a $6,000 target, and UBS forecasts $6,200 by September. These views reflect confidence in long-term, structural drivers rather than short-term sentiment.
This article is for informational purposes only and does not constitute investment or tax advice. Please consult a qualified financial professional before making any investment decisions.
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