Global Gold Prices Plummet Amid Iran Conflict: Here's Why

Global gold prices have weakened sharply amid the intensifying Iran conflict, which is disrupting global oil flows, damaging energy infrastructure, and raising fears of a prolonged conflict. Citing CNN on Sunday (22/3/2026), gold prices fell 11% over the course of this week, marking the largest weekly decline since 1983. Since the conflict began, the precious metal has already dropped more than 14%. Ordinarily, in times of economic uncertainty, gold serves as a safe-haven asset sought after by investors. The volatility has also driven a strengthening of the US dollar and prompted investors to reassess their portfolios. Market participants now anticipate that the US Federal Reserve will hold interest rates steady throughout the year. This situation enhances the attractiveness of yield-generating instruments such as bonds, while dampening interest in gold, which produces no income. Previously, gold prices had surged in the autumn when the Fed cut interest rates three times in a row. Now, expectations of persistently high interest rates in the coming months are pushing up bond yields, thereby increasing the opportunity cost of holding gold. “In the recent weakening of gold prices, the rise in yields has played a significant role,” said Hardika Singh, a strategic economist at Fundstrat. Not only in the US, but central banks in various countries are also adjusting their interest rate policies in response to the Iran conflict and the surge in energy prices. In addition to interest rates, movements in the US dollar have also become a key factor pressuring gold prices. Over the course of this month, the US dollar has strengthened by nearly 2% since the Iran conflict began, ending a downward trend from the previous few months.