Gold price stays flat despite predictions it would spike during Iran war

THE price of gold has remained flat and has actually gone down despite the Iran war and predictions it would spike.

It briefly reached a peak of $5,400 an ounce in the days after Donald Trump launched missile strikes in Iran.

But since then it has hovered just below $5,200 despite predictions it could soar past $6,000.

Cameron Parry, Founder & CEO at gold savings account TallyMoney, said

He added: “Gold has remained steady during this conflict as the gold price increased during the the pre-conflict build up. The missile strikes created an initial extra push into safe-haven assets, in turn pushing gold briefly to around $5,400 an ounce, but that pulled back a little as panic faded and other market forces rebalanced themselves. 

"A stronger US dollar, delayed expectations for interest rate cuts and some profit-taking after gold's strong years-long run have all helped keep gold steady as geopolitical risk and uncertainty reigns.

“In my view, the current gold price just reinforces the critical role gold plays.  Gold is functional and reliable during war and during peace. It is a continual counter to government-induced inflation and currency debasement. Over the coming weeks and months, I would expect the gold price to ebb and flow as it always does, in an upward trajectory - fast or slow the rise is not a trend, its the norm since the turn of the century."

Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said

He added: "There’s a ‘safe-haven tug-of-war; going in in the financial markets. While the Iran war drives demand for safe-haven assets like gold, the war has also spiked oil prices and inflation. This has forced the Federal Reserve among other major central banks to signal higher for longer interest rates, which increases the opportunity cost of holding non-yielding gold. 

"Simultaneously, the US Dollar has surged as a competing safe-haven, making dollar-priced bullion more expensive globally. What we have seen in March so far is a "liquidity flush" where investors sold gold to cover losses in crashing stock markets, capping the initial spike to $5,400. The longer the war goes on, or we see either a massive regional escalation or a sudden Fed pivot to rate cuts, the more chance of gold spiking up towards $6,000."

Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said

She added: "Gold has stayed broadly flat because war headlines are not the real driver of this bull market. Gold and silver were already in established uptrends before the Iran strikes, so the brief spike to around $5,400 simply sucked in ‘headline chasers’ who were then shaken out as the market quickly corrected.

"Short term geopolitical news can create volatility, but it rarely determines the long term trend in precious metals. The bigger forces are monetary excess, weakness in the financial sector, and stress in government bond markets, not the war itself. 

“The recent pullback in gold and silver has not damaged the underlying uptrend and instead looks more like normal consolidation after a strong rally. If those broader financial pressures continue to build, gold is likely to push through its recent highs in the coming weeks or months, potentially in a much more sudden move by summer.”

David Belle, Founder and Trader at Fink Money, said 

He added: "I think it's largely because markets move based on marginal buyers. The price had rallied so much already that the marginal buyer largely became exhausted based on geopolitical instability. 

“Perhaps traders and investors had priced in the Iran conflict already because they saw the build up of US ships. Markets are forward looking and so look a few months, sometimes years ahead.”

Nick Cawley, Analyst at Solomon Global, said

He added: "The recent market softness appears to stem from shifting expectations around interest rate cuts, which are now being pushed back. This delay is largely attributed to rising oil prices, although prices have come down on Trump's latest announcement), which may potentially reignite inflationary pressures. 

“The first Fed cut is now predicted to be in September. An alternative argument worth considering is that elevated oil prices could significantly dampen economic growth, prompting central banks to implement rate cuts sooner rather than later to stimulate their economies.  As long as gold stays above the psychological $5k level, then higher prices are likely in the coming months.”