Gold prices soared during the 12-day war with Iran last year and then stopped increasing when a ceasefire was announced.
However, 2 weeks after the latest conflict broke out between the US - Israel and Iran, gold prices remained almost unchanged.
Gold prices rose from $5,296 to $5,423/ounce after the US and Israel launched attacks on Iran on February 28, in line with the principle that geopolitical instability pushes investors towards traditional safe assets.
However, a sell-off caused gold prices to fall more than 6% to 5,805 USD on March 3.
This week, as the Iranian conflict escalates, gold prices traded in the range of 5,050 to 5,200 USD. Spot gold price at 9:26 am on March 13 Vietnam time was recorded at 5,119.99 USD/ounce.
According to CNBC, there are many factors to explain the above developments of the world gold market, including a stronger USD and higher treasury bond yields.
Mr. Ross Norman - CEO of the precious metals website Metals Daily - noted that rising oil prices could lead to prolonged inflation and higher interest rates as central banks try to curb the consequences of closing the Strait of Hormuz, an important maritime corridor for oil and gas.
Higher interest rates tend to increase the relative attractiveness of profitable assets such as government bonds, while gold, a precious metal, does not immediately generate profits.
The current fluctuations in gold and silver prices seem gloomy, but perhaps that is a normal feeling after the strong fluctuations in recent months" - Mr. Norman said.
This expert added that some institutional investors have begun to worry about holding physical gold because gold fluctuates abnormally.
Another explanation for the current developments of the world gold market is that conflicts have caused a wave of panicked sell-offs among investors, causing a "sold out" phenomenon when traders are forced to sell when prices fall.
Mr. Amer Halawi - head of research at Al Ramz - shared with CNBC's "Access Middle East" program earlier this week that: "If there is a shortage of liquidity, everything will be sold off until everyone understands the problem and the appropriate assets are concentrated. Traditionally, when there are strong fluctuations, even gold prices fall and then increase again.
Gold price forecasts from banks are still optimistic despite short-term fluctuations.
J.P. Morgan predicts gold prices will reach $6,300/ounce by the end of 2026, while Deutsche Bank still maintains its gold price target of $6,000 by the end of the year.
