As the conflict in Iran enters its 4th week, spot gold prices have fallen 15% since fighting began on February 28 and are 22% lower than the historical peak set in January.
The Iranian conflict raises many concerns, weakening interest rate cut expectations and putting pressure on global growth prospects. This makes analysts believe that gold prices will continue to fluctuate sharply in the short term.
In the long term, the role of gold as a channel to store value will continue to be affirmed.
Gold is often seen as an inflation hedging tool, but raising interest rate expectations to remain high in the short and medium term, due to strong energy prices, has become a disadvantageous factor for gold.
Gold usually performs positively in a stagnant environment, which is always true in history. However, profit-taking and sell-off activities may still appear in the short term. Trading positions from 2025 are being removed and the market has not yet witnessed a wave of trading according to the stagnant scenario of 2026" - Mr. John Reade, senior market strategist at the World Gold Council, commented.
According to ANZ analysts, the sharp increase in gold prices in one day when the Iranian conflict broke out, then falling back, is consistent with major shocks that have occurred before. In the early stages, liquidity demand often overwhelms the role of "safe haven assets".
When the Russia-Ukraine conflict broke out in February 2022, gold prices initially also increased but then fell back as interest rate policies were affected.
The increase in gold prices from $1,650/ounce in November 2022 to a record $5,595/ounce in January 2026 was driven by demand from central banks and institutional investors, before the speculative wave from individual investors, especially in Asia, increased sharply.
Gold prices hit a 4-month low of 4,908 USD/ounce at the beginning of the session on March 23, when the Chinese stock market - the world's largest gold buyer - fell the most in 1 year.
The most recent spot gold price fell 2.5% to 4,377 USD/ounce, after narrowing the momentum when US President Donald Trump announced that he would postpone attacks targeting Iran's energy infrastructure.
Regarding global demand, gold-backed exchange-traded funds (ETFs) recorded a net withdrawal of $7.9 billion, equivalent to 54.8 tons of gold, mainly in the US, bringing total holdings to 4,117.9 tons since the Middle East conflict broke out, according to data from the World Gold Council.
