Iran Conflict Halts Gold’s Bull Run: Here’s Why

Gold has moved into correction territory after the war in the Middle East. The Iran conflict has played a central role in this reversal. Prices have given back most of this year’s gains despite heightened geopolitical risk.

Recent price moves and key dates

The metal hit an all-time high of $5,589 per troy ounce on 28 January 2026. Coordinated strikes by the US and Israel on Iran began on 28 February. Since those strikes, bullion sank about 15.8% to roughly $4,394 per ounce. Year-to-date gains now sit near 1.6%.

Market data covering 1 January to 23 March 2026 come from FE Analytics. Last week produced gold’s worst weekly decline in more than 14 years.

Three forces driving the sell-off

Analysts point to a few dominant pressures. First, a stronger US dollar has undermined bullion’s appeal across markets. Jason Hollands of Bestinvest says gold and the dollar typically move in opposite directions.

Second, rising government bond yields have lifted the opportunity cost of holding non-yielding gold. Susannah Streeter, chief investment strategist at Wealth Club, notes higher treasury yields make gold comparatively less attractive.

Third, forced selling has increased volatility. Brokers report some investors sold bullion to meet margin calls or to cover losses elsewhere. Dollar strength also raises the local-currency price for many buyers, reducing demand.

Bond yields and market signals

Fixed-income moves reinforced the pressure. The US 10-year yield recently broke out of its prior trading range. UK 10-year gilt yields reached their highest level since 2008. German bund yields hit 15-year highs. Markets have largely priced out rate cuts and begun pricing in further tightening.

Safe-haven role questioned

Gold has not behaved like a traditional haven in recent weeks. When the US president issued a 48-hour ultimatum over the Strait of Hormuz on the weekend of 22-23 March, prices fell rather than rose. That surprised many investors.

Jock Henderson of CG Asset Management said his firm’s defensive funds exited gold on 12 March. He argued recent demand was driven more by narratives and retail ETF flows than by fundamentals. In that view, gold has sometimes traded like a proxy for risk appetite.

Historical context and what it means

This is the third major gold bull market since 1971. The first began after the US left the gold standard in August 1971. Gold climbed from about $35 per ounce then to roughly $835 in January 1980. That decade included sharp pullbacks, including a near 46% drop in 1975–76.

The second major run started around 2001. Gold bottomed just above $250 per ounce and later peaked near $1,900 in 2011. That cycle also saw significant corrections, including a nearly 30% fall in 2008.

The current bull market began with steady gains from 2015. It has already weathered a 20.8% bear market in 2022 and multiple corrections, including the present downturn.

Macro drivers and scenario analysis

Russ Mould of AJ Bell warns that sceptics will point to gold’s lack of yield and the cost of holding the metal. He estimates the current opportunity cost at about 3.75% from forgone interest on cash. Higher-for-longer rates would increase that cost.

Yet the oil-driven inflation shock from the Iran conflict recalls 1970s stagflation. Higher energy costs could strain government finances, widening deficits and lifting sovereign debt burdens. That may eventually push central banks back to rate cuts or quantitative easing, a backdrop that historically supports bullion.

Forecasts and investor choices

Major banks remain bullish on the medium term. JP Morgan’s year-end target stands at $6,300 per ounce. Deutsche Bank clients are guided toward $6,000 per ounce. Both banks cite central bank buying and longer-term de-dollarisation trends.

Investors now face a key question. Is this a temporary correction within a structural bull run, or the start of a deeper reversal? The answer depends on inflation, rate trajectories, dollar moves, and sovereign debt dynamics.

This analysis appears on Filmogaz.com. It explains why the Iran conflict halts gold’s bull run in the near term, and why the metal’s longer-term trajectory remains contested.