For thousands of years, gold has had a simple reputation. When the world is unstable, gold feels safe.
One of the strongest examples came in 1979-1980. The Iranian revolution, the hostage crisis of the American embassy in Tehran and the Soviet invasion of Afghanistan caused tremors in the international markets.
Investors flocked to protect their assets, and gold was given away. Prices rose from about $250 per ounce in early 1979 to nearly $850 in January 1980, a staggering 240% increase in about a year.
The rally reinforced gold’s identity as the ultimate crisis hedge.
Fast forward to 2026, and we’re once again seeing tensions surrounding Iran. But this time, the reaction of gold seems to be different.
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When US President Donald Trump announced military action on February 28, gold initially behaved as expected. The price of gold rose to $5,274.64 and on March 2, the price of gold reached $5,414.
The move followed military strikes that killed Iran’s Supreme Leader Ayatollah Khamenei, sparking fears of retaliation and disruption through the Strait of Hormuz, one of the world’s most important oil routes.
But the protest did not continue.
As of March 3, gold prices were down 2.1% over the past 24 hours, about $106 lower, trading at about $5,190.66 an ounce.
Analysts suggest that inflationary expectations may cause the rally to heat up. Commerzbank’s Thu Lan Nguyen told the Wall Street Journal that markets are now focusing more on the inflation risks associated with the war, reducing expectations of interest rate cuts. A stronger US dollar may also weigh on gold.
Meanwhile, last week, Bank of America set a new gold price target of $6,000 per ounce and predicted it would be reached in the next 12 months.
Gold has historically been seen as a hedge against inflation because it cannot be printed or expanded as easily as fiat currency. When inflation rises, investors often buy gold to maintain purchasing power.
Bitcoin (BTC) works on the same principle but in digital form. Its supply is limited to 21 million coins, which makes it mathematically small. Supporters argue that this fixed supply protects against currency loss, and is therefore often referred to as “digital gold”.
But unlike gold, Bitcoin behaves like a risk asset during crises, meaning its hedge narrative remains a debate among traditional investors.
Gold Prices
