Despite ongoing conflict in the Middle East, gold and silver prices have unexpectedly fallen, with gold losing 18% of its value since the start of the Iran-Krieg.
Berlin – Gold and silver have traditionally been viewed as reliable safe-haven assets during times of uncertainty. Yet, since the outbreak of the Iran-Krieg, both metals have experienced a continuous decline in value. As of midday Monday, a troy ounce of gold was trading around USD $4,370, a 4% decrease from Friday evening. This comes after gold surpassed the USD $5,000 mark for the first time in January.
Unlike previous crises, gold has not proven to be a safe haven during the current conflict. Since the start of the U.S.-Israeli military operations against Iran, the price of gold has lost more than 18% of its value. Silver has fared even worse, declining over 30% in value since the beginning of the war. This unexpected performance is prompting investors to reassess the traditional role of precious metals in portfolio diversification.
Why are Gold and Silver Prices Falling Despite the Iran-Krieg?
One key factor contributing to the decline is the diminishing expectation of lower interest rates. Market observers now anticipate that both the U.S. Federal Reserve and the European Central Bank will raise benchmark interest rates this year. This makes gold less attractive to investors, as the precious metal – unlike government bonds – does not generate interest income. The current strength of the U.S. Dollar is dampening demand for precious metals. Because gold and silver are priced in dollars, and the dollar is currently strong as a crisis currency, the metals are becoming more expensive for buyers outside the dollar zone.
Ascan Iredi, head of capital market strategy at Plutos Asset Management, told ntv: “The factors are essentially the rise in interest rates, because we now expect interest rates to rise.” He cited investor liquidity needs as another burden, noting that many were selling gold to free up capital for other investments. Iredi added: “It’s simply a matter of caution.” However, he emphasized that precious metals remain a viable long-term investment, and the market simply needs time to stabilize. “It’s a case of being caught up in the consequences,” Iredi said.
John Reade, chief market strategist at the World Gold Council, reached a similar conclusion. “Gold should perform well in a stagflationary environment – it always has – but there could be increased profit-taking and selling in the short term,” he explained to Reuters.
Will Gold Continue to Serve as a Crisis Hedge in the Long Term?
According to Reuters reports, purchases by central banks and institutional investors drove the price of gold from USD $1,650 per ounce in November 2022 to a record high of USD $5,595 in January 2026. The brief price increase at the start of the war, followed by rapid losses, mirrors a pattern seen in previous major shocks. In such situations, the immediate need for liquidity often outweighs the search for safe-haven assets, according to analysts at the Australia and New Zealand Banking Group.
John Meyer, an analyst at financial services firm SP Angel, was quoted by Reuters: “The overall picture remains unchanged: exploding budget deficits of the G7 states, persistent inflation and the diversification of central bank currency reserves against the backdrop of ongoing deglobalization.” Gold is therefore likely to retain its role as a hedge in times of crisis in the long term. (Sources: ntv/Reuters/dpa) (sischr)
