Investor Confusion! Middle East Conflict Sends Gold Prices Crashing This Week
Jakarta, CNBC Indonesia — Global gold prices have collapsed as geopolitical escalation in the Middle East intensifies. Throughout this week, global benchmark gold prices have fallen by nearly 3%. What has happened to this asset that carries the status of a safe-haven investment?
Based on Refinitiv data from trading on Friday (13 March 2026), the world’s spot gold benchmark price stood at US$5,018.43 per troy ounce, or down 1.19% from the previous day. Weekly performance declined 2.93%.
Gold prices fell this week despite geopolitical tensions dominating global headlines. This movement shocked many investors because precious metals typically strengthen during geopolitical crises. However, this time the market witnessed a sudden shift of funds into the US dollar and US government bond yields (Treasury yields), which have suppressed the entire precious metals sector.
The US dollar index rebounded sharply to 100.36 at the end of this week. Global gold purchases are converted into US dollars, so the dollar’s rise reduces demand.
Meanwhile, US Treasury yields jumped to 4.28% at the end of this week. Gold offers no yield, so the rise in US Treasury returns makes gold less attractive.
Despite the decline, the broader market picture remains quite complex. Gold prices have held above US$5,000. Analysts say today’s decline reflects short-term macroeconomic shocks rather than a collapse in long-term demand.
Meanwhile, continuing tensions in the Middle East continue to keep demand for safe-haven assets elevated.
In short, today’s movement reflects a collision between financial macroeconomic forces and geopolitical risks.
Additionally, a shift in market participants’ focus towards speculation in energy assets such as crude oil and gas, whose prices have surged, has also been a reason why global gold movement tends to decline. It should be noted that gold prices themselves have already touched all-time highs several times this year, so there is potential for profit-taking.
“Most investor funds are currently flowing into crude oil due to war escalation and anticipation of supply shortages, so gold prices are temporarily pausing,” said Aksha Kamboj, Vice President of the India Bullion & Jewellers Association (IBJA) and Executive Chairperson of Aspect Global Ventures, quoted on Saturday (14 March 2026).
Although global turmoil typically drives precious metals prices higher, this time a strong US dollar, rising interest rates, and sudden margin adjustments have dominated market narrative instead.
Market participants are currently still assessing whether this conflict will remain geographically limited or be short-lived, triggering profit-taking following earlier sharp gains, rather than driving a sustained rally.
“Gold and silver prices have risen significantly in recent months. So when prices surge after conflict news, some investors choose to take profits, resulting in a correction rather than a sustained sharp increase,” said Satish Dondapati, Fund Manager at Kotak Mutual Fund, quoted on Saturday (14 March 2026).
Gold prices are currently under pressure mainly due to US dollar strengthening and rising bond yields. Both factors make gold less attractive to investors, because precious metals do not provide yields like bonds or other interest-bearing assets.