Gold often rises during geopolitical crises, but its price can be limited by macroeconomic factors such as a strong U.S. dollar, rising bond yields, and expectations of higher interest rates.

Gold is traditionally viewed as a safe-haven asset during geopolitical crises. Investors often move capital into precious metals when global tensions increase, seeking protection from market volatility.
After the United States and Israel launched strikes on Iran on February 28, gold initially reacted as expected. Prices rose from $5,296 to $5,423 per troy ounce, reflecting a wave of safe-haven demand.
However, the rally was short-lived. A sharp sell-off followed, pushing prices down more than 6% to $5,085 on March 3. Since then, gold has traded in a relatively narrow range between $5,050 and $5,200, with spot prices recently around $5,175 per ounce.

The Strong Dollar Is Limiting Gold’s Upside

One of the main factors restraining gold prices is the strength of the U.S. dollar.

During global uncertainty, investors frequently move into dollar-denominated assets such as U.S. government bonds. This strengthens the dollar and can reduce demand for commodities priced in the currency.
According to Ross Norman, CEO of the precious metals research platform Metals Daily, the stronger dollar has played a significant role in keeping gold from extending its gains.
When the dollar appreciates, gold becomes more expensive for buyers using other currencies, which can reduce global demand.

Another key factor influencing gold prices is the increase in bond yields.
Higher yields on government debt make income-generating assets more attractive compared with gold, which does not produce interest or dividends.

If inflation pressures increase due to rising oil prices, central banks may keep interest rates higher for longer. That scenario would support bond yields and limit upside momentum for precious metals.
The risk of supply disruptions around the Strait of Hormuz — a critical route for global oil and gas shipments — has also pushed energy prices higher, potentially reinforcing inflation concerns.

Market Volatility Has Shaken Investor Confidence

Recent price swings have also made some institutional investors cautious.

Norman noted that gold has experienced unusually strong moves over recent months, which may be encouraging investors to reduce exposure temporarily.
Periods of high volatility can cause traders to lock in profits or reduce positions, limiting the strength of any short-term rally.

Another explanation for gold’s weak performance during crises is market liquidity.

According to Amer Halawi, head of research at Al Ramz, sudden shocks can trigger a wave of panic selling across multiple asset classes.
In such situations, investors may sell even traditional safe-haven assets to raise cash or cover losses elsewhere in their portfolios.
This phenomenon often causes short-term declines in gold before the metal resumes its role as a defensive asset.

Long-Term Forecasts Remain Bullish

Despite the recent volatility, several major financial institutions remain optimistic about gold’s long-term outlook.

Analysts at JPMorgan Chase expect gold prices to reach $6,300 per ounce by the end of 2026.
Meanwhile, Deutsche Bank maintains a $6,000 year-end target, suggesting that structural demand for gold could remain strong.
These projections reflect expectations that geopolitical tensions, inflation risks, and central bank demand will continue supporting the precious metal over time.

What Traders Are Watching Next

In the coming months, gold’s direction will likely depend on several macroeconomic factors:
U.S. dollar strength
Interest rate decisions from the Federal Reserve
Energy prices and inflation expectations
Escalation or de-escalation of geopolitical tensions

If inflation accelerates or financial markets experience deeper instability, gold could regain upward momentum.
For now, the metal appears to be consolidating after a period of strong gains, with investors balancing geopolitical risks against broader economic forces.

By Miles Harrington 
March 13, 2026

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