Gold edged higher on Tuesday but remains on track for its largest monthly decline in nearly 17 years, as the ongoing U.S.-Iran conflict continues to roil global markets.
Spot gold was trading around US$4,554 per ounce in early U.S. trading, up roughly 1 percent from the previous session, while front-month futures rose 0.6 percent to similar levels. Despite the gains, the metal is set for a 14.6 percent monthly drop, its worst performance since October 2008, when prices fell 16.8 percent amid the global financial crisis.
The volatility comes as the Iran war enters its fifth week, with uncertainty over the duration and scope of U.S. military objectives in the region. President Donald Trump indicated over the weekend that Washington was in discussions with Iranian officials to end hostilities but threatened attacks on Iran’s energy infrastructure, including electricity plants and oil facilities, if negotiations fail.
Meanwhile, U.S. Secretary of State Marco Rubio told Al Jazeera that the conflict’s goals are expected to be achieved in “weeks, not months,” while Reuters reported that 2,500 elite U.S. Marines from the 82nd Airborne Division were deployed to the Middle East over the weekend.
The war has pushed oil and gas prices higher, fueling concerns about rising inflation and the potential for interest rate hikes, factors that traditionally support gold. Yet, experts note that gold’s price has reacted differently this year due to shifts in investor behavior.
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“Prior to the Ukraine war, gold tended to rise when real bond yields and the U.S. dollar fell,” said Wayne Nutland, Investment Manager at Shackleton Advisers. “Post-Ukraine, gold surged beyond these historic relationships. Now, amid the Iran conflict, it has reverted to its traditional inverse correlation with bond yields and the dollar.”
Nutland added that strong price gains earlier in 2026 may have prompted profit-taking, amplifying the recent declines.
Iain Barnes, chief investment officer at Netwealth, said gold’s volatility has doubled in recent months due to increased participation from financial investors. “Central banks initially drove a gold bull market through reserve diversification, but speculative positions became over-extended, leaving the metal vulnerable to corrections,” he said.
Analysts at Goldman Sachs remain cautiously optimistic over the medium term. They forecast gold reaching $5,400 per ounce by the end of 2026, assuming the Federal Reserve delivers expected rate cuts and speculative positions normalize. The bank noted, however, that short-term risks remain to the downside due to ongoing disruptions in the Strait of Hormuz, a key oil shipping route heavily affected by the conflict.
“Persistent Iran-related disruptions keep gold exposed to near-term liquidation pressures, but medium-term prospects are positive if geopolitical tensions accelerate demand for safe-haven assets,” Goldman analysts said.
Gold’s struggles reflect a broader recalibration of global markets, as investors weigh the impact of rising energy costs, geopolitical risks, and central bank policies. While the metal historically serves as a haven during uncertainty, this year’s sharp correction underscores the influence of speculative positioning and market dynamics beyond traditional safe-haven demand.
Gold’s slide is unusual because war normally boosts safe-haven demand, but this time the inflation and interest-rate story has overwhelmed the geopolitical bid. In March, spot gold fell about 11.8% for its steepest monthly loss since October 2008, even after a late rebound at month-end.
The key background is the Iran war’s impact on oil. Higher crude prices have revived fears of stubborn inflation, making investors think central banks—especially the U.S. Federal Reserve—may keep rates higher for longer or even tighten further. That hurts gold because bullion pays no yield, so when bond yields rise, holding gold becomes less attractive.
A stronger U.S. dollar has added more pressure. As the conflict pushed traders toward the dollar and forced a rethink on rate-cut expectations, gold became more expensive for buyers using other currencies. That reduced international demand at the same time as speculative selling accelerated.
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Another part of the story is positioning and liquidity. Some investors appear to have sold gold not because they turned bearish on it long term, but because they needed cash or were unwinding crowded trades after gold’s earlier rally. Community and market commentary has pointed to “cash is king” behavior—similar to what happens in periods of forced liquidation—where even traditional havens get sold.
There was, however, a bounce at the end of March and into early April as hopes of de-escalation surfaced. Gold recovered more than 3% in one session as traders reacted to signs the conflict might not intensify immediately. But that rebound was not enough to erase the broader monthly slump.
For your background paragraph, you can use this:
Background: Gold, traditionally seen as a safe-haven asset during geopolitical crises, has come under pressure despite the Iran war, as the conflict’s inflationary impact drove up oil prices, strengthened the U.S. dollar and lifted expectations that interest rates could stay higher for longer. Those forces have reduced the appeal of non-yielding bullion, pushing the metal toward its worst monthly performance since the 2008 financial crisis.
