Is gold no longer a safe-haven asset? Amid the conflict in Iran, the price of the precious metal has strangely fallen

Exactly one year ago, we wrote that the price of gold had reached an all-time high of $3,004 per troy ounce, driven by a moment of economic and political instability, largely influenced by the issues surrounding tariffs pushed by Donald Trump. Historically, gold has always been considered the ultimate safe-haven asset, the one investment that, even in times of crisis and war, tends to hold or increase its value rather than depreciate. And yet, with the recent conflict in Iran, for the first time the price of gold has suddenly collapsed: what happened?

Why gold prices fell during the Iran war

Gold had already reached extremely high levels, as highlighted by Wired, between late January and early February, coming close to $5,500 per ounce, nearly double compared to the previous year. A surge driven not only by geopolitical instability, but also by a more structural shift, as central banks built up record reserves, purchasing over 800 tonnes of gold in 2025 to diversify their exposure and shield themselves from currencies seen as more vulnerable.

Other precious metals such as silver had also recorded significant increases in 2025, signalling a broader rush toward assets perceived as safer. And yet, just as tensions between the United States and Iran began to further destabilize the Middle East, gold reversed course, losing around $500 in a single week, in what Bloomberg described as the sharpest drop since the 1980s.

Gold remains tied to global geopolitics, for better or worse

As explained by The Conversation, what we are experiencing right now is not a classic financial crisis, but an energy crisis. The blockage of the Strait of Hormuz and the surge in oil prices have reignited global inflation concerns, making a rate cut by the Federal Reserve less likely. When interest rates remain high, dollar-linked assets become more attractive because they offer returns, while gold, which pays no interest, loses appeal. The strengthening of the dollar, as also noted by Al Jazeera, has therefore acted as a more convenient alternative for investors, drawing capital away from gold.

Another less visible but crucial factor is the financialization of gold. Today, investors no longer buy only physical gold, but also complex financial products that track its price. This means its value is increasingly tied to speculative dynamics, ETFs (exchange-traded funds) and the movements of large funds. When these players begin to sell, whether to take profits or cover losses elsewhere, prices can fall rapidly, triggering a downward spiral driven by automatic sell-offs and ETF outflows.

After the ceasefire, gold rises again

Despite everything, gold remains deeply interconnected with global geopolitics. It acts as a barometer of global confidence: when international balances begin to falter, investors look for a safe haven, but today that refuge is no longer as stable as it once was. At this point, gold is no longer an impermeable bunker, but an asset that absorbs part of the volatility of the markets, especially when crises directly involve energy and inflation.

And yet, as often happens in contemporary markets, a single political signal can reverse the trend once again. According to Investing.com, following the announcement of a ceasefire between the United States and Iran in the past few hours, gold prices have risen again, reaching a three-week high and posting an increase of around 2.7%. The truce weakened the dollar and eased oil prices, reopening space for gold to return as a safe-haven asset.