Why gold hasn’t moved since the Iran conflict — and where it might go next

Gold rallied during the 12-day war with Iran last year and then gave up its gains when a ceasefire was announced. But, two weeks into the latest conflict, its price remains largely unchanged.

Gold prices rallied from $5,296 to $5,423 per troy ounce after the US and Israel launched attacks on Iran on February 28, matching the premise that geopolitical turmoil would push investors toward traditional “safe haven” assets.

But sell-off prices fell more than 6% to $5,085 on March 3. This week, as the conflict escalated, it traded between $5,050 and $5,200. Spot gold last traded at $5,175 per troy ounce.

According to Ross Norman, CEO of precious metals website Metals Daily, several factors could explain the lack of upward momentum, including a stronger dollar and higher Treasury yields.

Rising oil prices could lead to prolonged inflation and potentially higher interest rates as central banks struggle to stem the fallout from the closure of the Strait of Hormuz, a critical maritime corridor for oil and gas, Norman added.

Higher rates increase the relative attractiveness of yielding assets such as government bonds versus non-yielding precious metals such as gold.

“Gold and silver price movements look lackluster right now, but maybe that’s the way it feels after some epic moves over the past few months,” Norman told CNBC via email.

Some institutional investors are nervous about holding gold because it is unusually volatile, he said.

Another explanation is that the clashes trigger a wave of panic selling among investors, forcing traders to “flush” their positions as prices fall, said Amr Halawi, head of research at Al Ramz.

“If there is a liquidity crisis, everything will be sold until people understand this and reallocate the right assets,” he told CNBC’s “Access Middle East” on Tuesday.

“Traditionally, when there is a shock, gold also sells and then takes off.”

Bank forecasts remain bullish despite short-term volatility. JP Morgan predicts prices will reach $6,300 per ounce by the end of 2026, while Deutsche Bank has a year-end target of $6,000, according to its latest notes.