The numbers
Gold prices have recently experienced a notable decline, falling despite ongoing geopolitical tensions in the Middle East. As of March 20, gold was trading around $4,660, a significant drop from pre-war levels of approximately $5,200. This decline marks a brief fall below $4,300, the lowest price of gold in 2026.
The recent downturn follows a period of strong performance for gold, which had reached record highs above $5,600 per ounce in preceding months. Gold futures opened at $4,515 per troy ounce on a recent Monday, reflecting a 1.3% decrease from the previous Friday’s closing price of $4,574.90.
Analysts attribute the decline in gold prices to higher real yields and a stronger US dollar, which dampens demand for gold priced in dollars. A stronger dollar makes gold more expensive for non-US investors, further impacting global demand. Despite the current downturn, gold prices have increased by 48.8% over the past year, indicating a volatile but upward trend in the long term.
Central bank demand for gold has surged to its highest level since the 1960s, with institutions like JP Morgan raising their year-end gold price target to $6,300 per troy ounce, while Deutsche Bank has forecasted gold to reach $6,000 by year-end. This demand is driven by a long-term trend of official reserve and investor diversification into gold, which experts believe has further potential to grow.
Market observers have noted that the ongoing conflict in Iran has caused a spike in oil prices, which has been dollar-positive and weighed on gold prices. As tensions linked to Iran begin to ease, analysts like Nigel Green suggest that capital will rapidly rotate back into gold, potentially leading to a sharp upside move due to the scale of central bank buying.
Experts like Cosmo Sturge emphasize that the core reasons for holding gold have been strengthened by the current conflict, predicting a strong rally for gold and gold miners as the situation stabilizes. Bart Melek points out that concerns over slower growth and inflation, coupled with tightening policies from the Federal Reserve, are influencing investor sentiment.
While the market shows signs of potential recovery, uncertainties remain. The exact impact of the Iran war on gold prices is still unclear, and future interest rate decisions by the Federal Reserve are uncertain. Details remain unconfirmed, but the outlook for gold continues to attract attention from investors and analysts alike.