Reasons for the Decline in Gold Prices Since the US-Iran War
Global gold prices have declined amid the war between the United States (US) and Iran. Tracing back to the start of the US-Iran war, global gold prices have dropped more than 14%. Global gold prices even fell 11% in the past week, the deepest since 1983.
Outshone by Foreign Currencies
Executive Director of CELIOS, Bhima Yudhistira, assesses that gold assets are now outshone compared to the US dollar, Japanese yen, and Swiss franc as safe havens. Moreover, gold prices that have been high over the past two years have prompted many market players to take profits.
“Gold has become too expensive, so many traders are profit-taking because they have accumulated gold over the past two years,” said Bhima, quoted from detikNews on Tuesday (24/3/2026).
In addition, liquidity needs have led investors to prefer holding cash. According to Bhima, Uncle Sam’s currency has won the battle as a safe asset amid the crisis. Bhima predicts gold prices will fall to the level of Rp 1.9-2 million per gram.
“Liquidity needs also make gold unattractive. Now cash is king, meaning the US dollar is king. After the buzz about de-dollarisation, the US dollar is now winning the battle as the safest asset amid the crisis. Gold prices ahead are still likely to correct, projected to the level of Rp 1.9-2 million per gram,” stated Bhima.
Influenced by Financial Factors
Meanwhile, Economist from the Center of Reform on Economics (CORE), Yusuf Rendy Manilet, views the decline in gold prices amid the ongoing conflict as unusual. This indicates that the market is more influenced by financial factors than geopolitics.
Yusuf said expectations of high interest rates persisting longer make instruments like bonds more attractive. Gold, which provides no yield, is temporarily abandoned by investors, thus pressuring its price.
“In recent times, expectations that the Federal Reserve will hold high interest rates longer make instruments like bonds more attractive. Gold, which provides no yield, is temporarily abandoned by investors, thus pressuring its price,” explained Yusuf.
In line with Bhima, Yusuf mentioned that the strengthening US dollar exchange rate is also pressuring gold prices. Gold, priced in US dollars, becomes relatively more expensive for global investors, weakening demand.
“This makes demand not as strong as usual even though the global situation is still full of risks. In this context, the market seems to see that the conflict between Iran, the United States (US), and Israel has not reached a level that truly disrupts global economic stability, so the push towards safe-haven assets like gold is not yet strong,” said Yusuf.
Investors Shifting to Bonds
According to Yusuf, safe-haven assets are no longer centred on gold. Some investors are instead shifting to the US dollar and US government bonds.
“Interestingly, safe-haven assets are not only gold at the moment. Some investors prefer the US dollar and US government bonds, making demand for gold more fragmented. This differs from the classic pattern where gold is usually the main destination when global risks increase,” explained Yusuf.
Yusuf assesses that the direction of gold prices is greatly determined by interest rate dynamics and geopolitical escalation. If inflation eases and interest rates fall, gold has the potential to strengthen again.
“On the other hand, if the global conflict widens and starts impacting the real sector, such as energy or trade, then demand for gold as a hedge asset could also increase,” revealed Yusuf.