Iran War Is Doing a Number on Gold Prices

Gold just experienced its sharpest weekly decline in more than four decades, marking a setback few investors expected. Over the past week, the precious metal has fallen 11%, bringing its total drop to more than 14% since the start of the war with Iran. The downturn is notable because gold is traditionally viewed as a safe haven during periods of geopolitical tension.

Although the conflict has driven oil prices higher and intensified concerns about inflation, it has also changed expectations surrounding interest rates and currency movements in ways that are hurting gold. Investors now believe the Federal Reserve is more likely to keep interest rates steady rather than move toward additional cuts. As a result, bond yields have become more appealing, drawing attention away from gold, which does not provide income.

Analysts note that gold’s role as a hedge against uncertainty and rising prices can weaken when interest rates climb. Higher yields increase the opportunity cost of holding an asset that produces no return. At the same time, the U.S. dollar has strengthened by nearly 2% since the war began, making gold more expensive for international buyers and adding further pressure on prices.

The recent slump follows a remarkable surge in gold earlier in the year. Prices reached $5,000 an ounce in January and climbed 64% during 2025. Now, however, momentum has reversed, with gold trading near $4,450 an ounce as of Friday.

Despite the recent pullback, some market strategists remain optimistic about gold’s long-term prospects. Ed Yardeni, for example, is still maintaining a potential year-end price target of as much as $6,000 per ounce.

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