Is the price of gold rising?
The announcement of a two-week ceasefire in the Middle East has seen the gold price rise
The price of gold gained 3.9% on 7 April as news broke that a two week ceasefire had been agreed between the US and Iran.
While gold is typically viewed as a safe haven during times of crisis, its gains during 2025 (gold appreciated substantially in value last year) had meant that global investors sold off gold holdings as a ready source of funds when other assets fell in the light of the conflict breaking out.
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Last year was the best year for gold price gains since 1979, and the price of gold made a strong start to 2026, registering its all-time high of $5,600 on 29 January.
“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.”
In light of the impact of the war in Iran, can gold prices rally further this year, or are more falls in store?
Why the ceasefire has led to higher gold prices
Several factors led to the price of gold falling after the US/Israeli war with Iran broke out.
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 may sell off assets that have recently risen in value as they will be able to secure a profit on them.
Gold is priced in dollars, and had therefore been benefitting from a weaker dollar prior to the outbreak of the war. Because the US is a net exporter of oil and therefore a potential beneficiary of rising oil prices relative to other countries, the dollar rose during the conflict, pushing gold prices down.
Greater inflationary expectations also reduced the chances of central banks cutting interest rates. Hawkish central bank policy, particularly in the US, is typically negative for gold prices because higher rates increase the appeal of bonds compared to gold, which pays no income.
The ceasefire unwinds some of these effects, at least for the next two weeks, and should it be sustained, it could reverse them over the long run.
“The earlier selloff was driven by an unwind in crowded positioning, alongside a stronger dollar and higher yields,” said Lale Akoner, global market analyst at investment platform eToro. “As those pressures eased, with the dollar weakening and yields moving lower, gold has recovered, with the ceasefire contributing to a broader recalibration in risk sentiment.”
How could the Iran war impact gold prices in the long term?
The future trajectory of the gold price depends on how long the ceasefire lasts, whether it becomes a permanent peace, and how quickly oil supplies could return to pre-war normality.
“Negotiations over the next two weeks will be important for near-term direction, but not decisive for the longer-term outlook,” said Akoner. “The ceasefire reduces immediate tail risks and eases pressure on the dollar and rates, both supportive for gold.”
However, Akoner cautioned that a breakdown in the peace talks ongoing between the US and Iran could reintroduce gold price volatility.
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 ceasefire prompts central banks to resume their interest cutting cycles that most had been enacting prior to the conflict then this could be a tailwind for gold prices (higher rates are typically a negative for gold, as they increase the relative appeal of alternative defensive assets like bonds).
“Over the longer term, we believe the key drivers remain intact, particularly central bank demand and diversification, reinforcing gold’s role as a long-term hedge,” said Akoner. “In that context, the recent volatility looks more like a reset within an ongoing bull market than a challenge to it.”
AJ Bell’s Coatsworth also feels that gold could be worth holding while the dust from the ceasefire settles. “While we now have confirmation of a two-week ceasefire and equity markets have rallied, having gold is a classic ‘just in case’ positioning by investors and a way of hedging their bets in case the recovery rally is derailed by renewed tensions between the US and Iran,” he said.
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 in Q2 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 exchange-traded fund (ETF) or exchange-traded commodity (ETC).
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 says.
