Iran Conflict Sparks Global Uncertainty, Why Isn't Gold Price Surging Sharply?

JAKARTA - The rising geopolitical tensions stemming from the conflict in the Middle East involving Iran, the United States (US), and Israel have once again placed gold in the spotlight on global markets. Historically, this precious metal has often been a destination for investors when risks increase, whether due to wars, economic crises, or financial market volatility. However, recent developments show that despite heightened uncertainty, gold price movements have not surged dramatically as typically seen in previous crisis episodes. Several economists assess that a combination of monetary policy expectations, the strengthening US dollar, and gold’s strong price performance since the beginning of the year provide the main explanations for the market’s relatively limited response. One of the primary factors influencing gold price movements is investors’ expectations regarding the direction of US central bank interest rate policy, the Federal Reserve (The Fed). In conditions of potentially rising inflation due to spikes in energy prices, the market is beginning to consider the possibility that monetary easing will not occur in the near term. “This makes US dollar assets more attractive, and gold, which does not yield interest, less appealing,” said Meadway, quoted from Al Jazeera, Wednesday (18/3/2026). According to him, investors have for some time anticipated a reduction in US interest rates. Nevertheless, this shift in expectations affects gold’s attractiveness, which does not provide returns compared to interest-bearing instruments like bonds. Investors can obtain higher returns from dollar-based assets, thereby limiting demand for gold as a hedge.