Iran War: Why Gold Prices Are Not Soaring?

TEMPO.CO, Jakarta - A well-known stock market proverb says: "Buy when the cannons are firing." In other words, in times of war and uncertainty, people should invest.

Those looking to protect their wealth and assets often turn to gold — even though gold is rarely cheap in turbulent times. In times of crises, such as a pandemic or a war, demand for gold typically rises. This stronger demand tends to push prices higher, as it did in the first weeks of this year.

If prices continue to rise, investments in gold not only preserve wealth but also potentially increase it. So is the current environment a boon for speculators?

Gold is generally less of a speculative investment and more of a safe-haven asset. This has been reflected in the gold price's recent development, which has repeatedly reached new highs — mirroring the tense global political situation. According to the comparison portal Gold.de, the precious metal reached its all-time high on January 28, 2026, at $5,417.60 (€4,721.40) per ounce.

However, during the Iran war, the price has not continued to rise despite increased market uncertainty. One week after the war began on February 28, gold briefly traded at $5,327.42, but has since stabilized within a range of $5,000-$5,200 per ounce.

For Michael Hsueh, head of the Metals Research division at Deutsche Bank, this does not come as a surprise. Although gold prices tend to be higher on average after a crisis event, there are "greater differences between individual cases than the average might suggest." He told DW that Deutsche Bank observed a similar pattern last year following Israel's attacks on Iran.

Gold Is Not Getting More Expensive

Carsten Fritsch, a commodities analyst at Commerzbank, has noticed similarities with the current conflict: "The gold price has not benefited from the uncertainty caused by the Iran war," he told DW. "On the contrary, it is actually trading lower than before the war began."

He says there are two factors at play here. First, gold is traded in US dollars. When the dollar strengthens, gold becomes more expensive for buyers using other currencies. As a result, demand from those buyers declines, which tends to push the price down.

Second, rising oil prices are driving up inflation. When inflation increases, it becomes less likely that the US Federal Reserve will cut interest rates. If investors expect interest rates to stay higher, gold becomes less attractive because it does not pay interest, while other investments do.

An Overheated Gold Market

Wolfgang Wrzesniok-Roßbach, managing director of Fragold GmbH and an advisor to private and institutional investors, is not surprised by the current sideways movement in the gold price. In his view, it reflects a cooling of the market.

"The rise in the gold price and the prices of other precious metals in the last quarter and in January was disconnected from the actual fundamental data and had therefore become completely exaggerated."

In his assessment, the sharp increase in prices had real consequences for demand. For example, he said that jewelry demand—an important factor in the gold market—fell in the fourth quarter of last year to its lowest level in the past 15 years.

Central banks, he said, were also cautious because of the high price. Although they still bought 230 tons of gold, this was the second-weakest fourth-quarter demand from central banks in the past five years.

He attributes the bull run in the gold market primarily to price-driving forces, notably the purchases by investors and speculators who had previously bet on falling prices. To limit their losses, they now had to buy gold at higher price levels, he explained.

"The sharp decline on January 30 and afterward clearly revealed how exaggerated the previous surge had been."

Carsten Fritsch shares this view. "The price increase in January was an exaggeration and could no longer be explained by the usual influencing factors. Greed and the fear of missing out on the price rally also played an important role."

All That Glitters Is Not Gold

Gold is not the only commodity currently experiencing a boom. Silver is also in strong demand and therefore expensive. However, Wrzesniok-Roßbach does not see a price bubble in this precious metal.

"As far as the silver price is concerned, I actually see it as fundamentally very well supported, and in my opinion we will have to get used to a permanently high price level and thus a complete revaluation."

Frank Schallenberger, a commodities expert at Landesbank Baden-Württemberg (LBBW), disagrees. In his view, demand for silver is likely to weaken. "In the coming months, the slowing momentum in the solar industry, the weak global economy, and a further decline in jewelry demand are likely to weigh on the silver price."

What’s Next for Silver?

Asked for a forecast, he painted a more nuanced picture of the silver market.

"It is uncertain whether the silver market will show a supply deficit for the sixth consecutive year in 2026. If sales of silver ETCs [Exchange Traded Commodities – the ed.] continue over the course of the year, the market balance could actually shift into a supply surplus," he said.

In contrast, Wolfgang Wrzesniok-Roßbach believes silver prices are likely to keep climbing. He points to the global push toward electrification — particularly the expansion of solar power — as the key driver. Because of this trend, he says he would not be surprised if silver eventually stabilizes at levels above $100 per ounce.

The Outlook for Gold

When it comes to gold, Frank Schallenberger urges caution. Weak jewelry demand and central banks' hesitancy to increase their gold holdings could slow the recent price rally in the months ahead, he noted. "At the same time, US policy remains an important source of uncertainty, as it may continue to trigger unexpected reactions in financial markets."

Still, he notes that gold is likely to remain attractive to investors as a safe-haven asset.

Carsten Fritsch of Commerzbank takes a more forward-looking view. If the war were to end, he expects the dollar and oil prices to decline, which would generally support higher prices for both gold and silver.

However, whether prices would actually rise again would largely "depend on how strongly higher oil prices feed into inflation — and how central banks choose to respond," he said.

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