Has gold had its time in the sun?

The geopolitical environment seems to be in a constant state of flux as tensions between world powers continue to mount and volatility becomes more frequent. Amid this uncertainty that has defined recent years, gold has largely proved the thesis of it being a “safe-haven asset”^.1 From 2024 to 2025, the precious metal’s price hit over 90 record highs.²

But more recently, gold has seen a correction, falling more than -13% from 1st March to 1st May.³ This almost exactly coincides with the Iran crisis, apparently undermining gold’s safe haven status. So, why is gold not behaving in a way that we might expect? Is it no longer a safe haven asset? The answer is a little more nuanced.

How does gold perform during and after major crises?

Historically, gold has been viewed by many as a hedge against uncertainty. It has no yield, earnings, or industrial dependency – its value is purely a function of perceived worth by investors.

In recent crises, this has largely held true. Despite the 2008 financial crash sending markets into turmoil, by March 2009, gold was comfortably above its pre-crisis level and went on to make strong gains throughout the second half of 2009, 2010, and most of 2011. During the Covid-19 pandemic, gold hit all-time highs of over $2,000/oz by early August 2020. Following the Russian invasion of Ukraine in 2022, gold prices initially surged and went on to hit record highs.

However, this is only part of the story. While gold has demonstrated resilience during and after crises, its behaviour is not linear. In each of these episodes, gold experienced initial drawdowns and elevated volatility. As the 2008 crash took hold, gold was initially very volatile and saw two significant dips, and at the onset of the Covid-19 pandemic, gold fell to $1,451/oz in March 2020 before rebounding.⁴

A familiar pattern has historically emerged during periods of market stress: gold initially sells off as a crisis unfolds, before recovering into a broader bull phase.⁵

This dynamic is largely driven by liquidity. When markets come under pressure, investors tend to sell what they can – not necessarily what they want to. Gold, as a highly liquid asset, is frequently one of the first positions to be reduced as investors raise cash to meet margin calls or offset losses elsewhere.⁶ This forced selling can temporarily push prices lower, even in an environment that would typically support gold. Recent developments appear consistent with this pattern.

The escalation in Iran and the resulting market volatility have likely triggered broad-based liquidation, including in gold, as investors manage drawdowns across portfolios.

Other factors at play

At the same time, several macro forces are acting as short-term headwinds.

First, the Iran conflict has contributed to an oil shock, fuelling inflation concerns and reducing expectations for near-term rate cuts.⁷ A “higher-for-longer” rate environment increases the opportunity cost of holding non-yielding assets like gold, weighing on valuations.

Second, currency dynamics are amplifying this effect. Because gold is priced in US dollars, a stronger dollar typically acts as a headwind. The US Dollar Index moved above 100 in March, making gold more expensive for non-dollar investors and dampening demand at the margin – coinciding with one of gold’s more significant price declines this year.⁸

Taken together, these forces help explain why what would be a supportive backdrop for gold has instead created short-term pressure.

Is gold still a safe haven asset?

Crucially, this does not invalidate gold’s role as a safe haven. Periods of acute stress, liquidity needs, interest rate expectations, and currency strength can temporarily override gold’s traditional drivers – before its longer-term defensive characteristics reassert themselves.⁹ Central bank buying, de-dollarisation, and a collapse of confidence in the rules-based international order all structurally support gold as a potential safe haven over the medium term.¹⁰

Additionally, for investors outside the U.S., gold can continue to function as a hedge against the dollar. While strong dollar performance has impacted the price of USD gold, this has not been the case everywhere. In euro terms, gold rose from approximately €1,850 to €3,700 per ounce between 2024 and late 2025. Japanese and Chinese investors saw even greater gains, with value more than doubling over the same period; thanks to the Yen and the Yuan’s respective weakness compared to the dollar.¹¹

Gold’s status as a safe haven is not necessarily broken or gone – but it is conditional. The current correction does not erase the structural case for gold; increased geopolitical instability, central bank buying, de-dollarisation, and increasing U.S. fiscal concerns are still apparent. A reversal in dollar strength – whether driven by rate cuts, reduced safe haven dollar demand, or a swift and complete resolution to the Iran conflict – could immediately remove much of the short-term headwind suppressing gold. And if (and/or when) the Fed pivots, falling US Treasury yields will reduce the opportunity cost argument against holding a non-yielding asset.

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