Geopolitical factors by themselves are insufficient to drive gold prices higher

Gold Prices Defy Safe-Haven Expectations Amid Global Tensions

Although geopolitical risks have intensified, factors such as rising energy costs, a robust US dollar, and evolving interest rate forecasts have taken precedence over traditional safe-haven demand.

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Even as the conflict involving Iran has escalated, gold has declined by roughly 14% since the onset of hostilities. This trend underscores the dominant influence of macroeconomic elements—especially interest rates, dollar strength, and asset allocation—on gold’s short-term movements. Such behavior mirrors previous periods of market upheaval, where the need for liquidity often surpasses the appeal of safe-haven assets in the initial phase.

Gold’s performance following Russia’s invasion in 2022 serves as a notable example: prices initially climbed, but broader market forces soon took over.