How has the Iran war impacted the gold price?
The price of gold often climbs during periods of heightened geopolitical tension, but has that been the case since the recent outbreak of conflict in the Middle East?
Gold prices have been surprisingly subdued since the outbreak of the war in the Middle East at the end of February, with the yellow metal seemingly unable to sustain its eye-catching rally even as political tensions escalate.
The price of gold rose 16.3% in 2026 through to 13 March, continuing its strong performance from 2025 during this year’s opening weeks.
But, despite investors typically viewing gold as a safe haven asset during times of political uncertainty, the gold price has fallen since the outbreak of the war in Iran and the Middle East. Between 27 February and 13 March, the price of gold fell 4.9%.
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“Gold is often considered to be a haven in troubled times, but what many people don’t realise is that its price can still drop in a falling market,” said Dan Coatsworth, head of markets at AJ Bell. “Investors often sell what they can in the face of trouble, and gold is a liquid asset.”
Last year was the best year for gold price gains since the 1970s, and the price of gold made a strong start to 2026, registering its all-time high on 29 January.
The precious metal’s dramatic gains earlier this year had many observers wondering if the gold price could rise to $6,000 during 2026, hurtling through the $5,000 threshold – then, briefly, $5,500 – in January.
But the conflict in Iran, as well as Donald Trump’s pick of Kevin Warsh as the next chair of the US Federal Reserve (Fed), appear to have made that less likely in the immediate future.
Why have gold prices fallen since the outbreak of the Iran war?
There are several reasons why the gold price has fallen.
Gold is a liquid asset that has seen spectacular gains over the past year. In an environment where all assets (besides oil) are falling, investors will naturally sell off assets that have recently risen in value as they will be able to secure a profit on them.
There are more technical reasons, too. Gold is priced in dollars, and had therefore been benefitting from a weaker dollar prior to the outbreak of the war.
Counterintuitively, though, the conflict has seen the value of the dollar rise in relation to other currencies – largely because the US is a net exporter of oil and is therefore a potential beneficiary of rising oil prices relative to other countries.
“The war has seen yield curves steepen, which has taken the wind out of gold investors’ sails, and the precious metal dipped below $5,000 per ounce over the weekend before recovering some ground,” said Derren Nathan, head of equity research at Hargreaves Lansdown.
Will the gold price recover?
The future trajectory of the gold price depends on how long the conflict lasts, and broadly what happens to the global economy as a result.
If the oil price remains elevated, it could materially impact global inflation. Normally, that would be beneficial for gold prices, though if this coincides with further strength in the dollar then that impact could be mitigated.
If the conflict prompts central banks to hold or reverse the interest cutting cycles that most had been enacting then this could be a headwind for gold prices (higher rates are typically a negative for gold, as they increase the relative appeal of alternative defensive assets like bonds).
“Even if central banks don’t produce any surprises this week, all asset classes are likely to prove sensitive to guidance and commentary around the path for rates later in the year,” said Nathan.
Think you know your gold? Test your knowledge in our gold quiz here.
How to gain exposure to gold prices
If you are considering where to invest for 2026 and want to add some gold exposure, there are three main approaches.
The first one is investing in the metal itself through a financial contract, such as an ETF or exchange-traded commodity (ETC).
Investments into these kinds of products are another factor helping to support gold prices this year.
“European investors are getting involved, having added over $6.5 billion to gold ETCs in 2025 alone, reversing the outflows of 2024,” said Tom Bailey, head of research at HANetf.
See our article on the best gold ETFs for more information.
You can also get indirect exposure by investing in the miners that dig gold out of the ground. This can be done by investing directly in their shares, or by buying a gold fund or investment trust.
Lastly, you can buy physical gold bars or gold coins.
In terms of how much gold to hold in a portfolio, Tom Stevenson, investment director at Fidelity International, suggests around 5-10% is a good amount – which is about the same as you might hold in cash.
“The two offer insurance and dry powder to complement the growth and stability of the shares and bonds that make up the bulk of a balanced portfolio,” he comments.
