An Anomaly: Reasons Why Gold Prices Are Crashing Amid the Iran Conflict
An Anomaly: Reasons Why Gold Prices Are Crashing Amid the Iran Conflict
Jakarta, CNBC Indonesia - Amid escalating Middle East conflicts, gold prices have instead fallen 24.7% from their record high and are now at the US$4,264 level, creating a somewhat surprising market condition. Despite extreme volatility, JP Morgan projects gold prices to reach US$5,400 by the end of 2026. From this, investors need to understand the reasons for the decline in this commodity’s price to uncover hidden investment opportunities.
Why Is the Iran War Actually Pressuring Gold Prices?
The war in the Middle East is creating an unusual domino effect. US and Israeli airstrikes at the end of February 2026 pushed Brent oil prices to surge to US$100 per barrel. The rise in oil prices directly boosted inflation, which then tied the Federal Reserve’s hands from lowering interest rates.
This is the chain that kills the gold rally, starting with rising oil prices, then surging inflation, and the Fed subsequently holding benchmark interest rates. As a result, the opportunity cost of gold increases, and investors sell gold to seek yields.
There are five main mechanisms working simultaneously:
Higher Interest Rates for Longer. Stagnant inflation forces the Fed to maintain interest rates at 3.50%-3.75%. Expectations for cuts, previously calculated at two to three times in 2026, have now shifted to October 2026 or even been eliminated.
Strengthening US Dollar. A flight to the dollar occurs during crises; the US dollar has strengthened nearly 2% since the war began, automatically making gold more expensive for global investors.
Forced Liquidation in the Futures Market. Leveraged traders are forced to sell gold positions to meet margin calls. This forced selling creates a snowball effect: prices fall, more margin calls, more forced selling.
Temporary Cash Conversion. In the initial phase of stagflation panic, investors temporarily convert to cash before shifting to hard assets.
Institutional Profit-Taking. Gold had risen 66% in 2025 and over 50% in early 2026. Institutional investors with large gains are rebalancing portfolios – a normal cyclical practice.
Although the correction is painful, Wall Street consensus remains bullish for the medium and long term. JP Morgan maintains its gold price target in the range of US$5,400–US$6,300 for the end of 2026. Wells Fargo even sets a target in the range of US$6,100–US$6,300, while BNP Paribas raises its projection by 27% with a target above US$6,250 at the peak phase. Goldman Sachs projects gold prices at US$5,400 based on assumptions of persistent inflation and strong ETF inflows.
Head of Global Commodities Research at JPMorgan, Natasha Kaneva, emphasises that although the gold price rally will not be linear, they believe the trends driving this commodity’s price increase have not yet ended.
Fundamentally, no major institution forecasts a structural bear market for gold. These targets were even set before the Iran conflict heated up. This means there is potential for further upward revisions if the geopolitical situation continues.
Three scenarios for future gold prices:
Is It Worth Buying Now?
Pluang’s research team views this question as frequently asked in the last two weeks. The answer depends on the investment horizon, but there are strong arguments supporting accumulation at current levels.
Arguments for buying:
More attractive valuation. From conservative targets of US$4,800–US$5,400 by the end of 2026, there is upside potential of 12–27% from the current US$4,264 level.
Long-term fundamentals unchanged. Global central banks are still buying 585 tonnes of gold per quarter. The de-dollarisation agenda is ongoing. The US debt approaching US$37 trillion will not disappear overnight.
History favours buyers in major corrections. Every correction over 20% in the 2020s gold bull market has proven to be a profitable entry point.
Institutional accumulation, not exit. SPDR Gold Shares (GLD) and GLDM record inflows from institutional investors using the price dip to add positions.
Choosing Gold Investment Vehicles: PAXG, XAUT, GLD, or Digital Gold?
According to Pluang’s Head of Research, Jason Gozali, for investors in 2026, owning gold no longer means storing gold bars in a personal safe, which is actually risky. Blockchain technology and capital markets have made access easier. In the Pluang app, you can easily access various instruments.
PAX Gold (PAXG): a digital token backed by one troy ounce of physical London Good Delivery gold in Brink’s vaults. PAXG combines the security of physical gold with the speed and liquidity of blockchain, allowing gold transfers or trades 24/7.
Tether Gold (XAUT): Similar to PAXG, XAUT provides ownership of specific physical gold in Swiss vaults. This is a popular choice for users in the Tether ecosystem who want a stable hedging asset. Additionally, at Pluang, you can also buy XAUT futures, namely XAUTUSDT-PERP.
SPDR Gold Shares (GLD): For investors comfortable in the stock market, GLD is the world’s largest gold ETF. GLD tracks the spot gold price, offering the most efficient exposure to gold prices without needing physical storage. At Pluang, you can buy GLD call options (for bullish views) or put options (for gains when gold prices fall).
Digital Gold (Antam/UBS): Physical gold investment starting from small amounts with the option to withdraw physical precious metal.
Besides gold, there is also silver that can be used as one of the investment instruments because its movements are similar to gold. At Pluang, there is the iShares Silver Trust (SLV) managed by BlackRock since 2006. BlackRock is one of the world’s largest fund managers with total assets under management of US$14 trillion as of January 2026.
This ETF is designed to track the physical silver price and is backed by silver bullion. When silver rallies past US$100 per ounce, SLV experiences a surge in trading volume and a