A familiar market saying advises: “Buy when the cannons are firing.” In times of conflict and uncertainty, investors often flock to safe havens — and gold is usually at the top of that list. Demand for the precious metal typically rises during crises, which tends to push prices up, as seen in the early weeks of this year.
Gold is widely viewed less as a speculative play and more as protection for wealth. Reflecting global tensions, the metal hit an all-time high on January 28, 2026, at $5,417.60 (€4,721.40) per ounce, according to market data. Yet when the Iran war began on February 28, prices did not continue their ascent. One week into the conflict gold briefly traded near $5,327.42 but then settled into a range around $5,000–$5,200 per ounce.
That muted response is not entirely unexpected, analysts say. Michael Hsueh, head of Metals Research at Deutsche Bank, cautions that while crises on average lift gold prices, the effects vary widely between events. Deutsche Bank saw a similar pattern after Israel’s attacks on Iran last year.
Why gold isn’t soaring
Carsten Fritsch, a commodities analyst at Commerzbank, notes the gold market has not benefited from the uncertainty tied to the Iran war and in fact is trading below pre-war levels. He points to two main pressures:
– Dollar strength: Gold is priced in US dollars. When the dollar strengthens, the metal becomes more expensive for buyers using other currencies, reducing demand and weighing on prices.
– Inflation and interest-rate expectations: Rising oil pushes inflation higher, which lowers the probability that the US Federal Reserve will cut rates soon. Higher or sticky rates make non-yielding assets like gold less attractive compared with interest-bearing alternatives.
An overheated market
Wolfgang Wrzesniok-Roßbach, managing director of Fragold GmbH and adviser to investors, sees the recent sideways move as a cooling after an overheated phase. He argues the late-2025 and January price surge was disconnected from fundamentals and became exaggerated.
The earlier rally had tangible effects on demand patterns. Jewelry purchases — a major component of physical gold demand — fell in the fourth quarter to their weakest level in about 15 years. Central bank demand, while still present at 230 tonnes for the quarter, was the second-weakest fourth-quarter total in five years, suggesting caution at higher price levels.
Wrzesniok-Roßbach and Fritsch both point to investor behavior as a driver of the bull run: speculative buying and short-covering amplified the upward move, and the sharp downturn around January 30 exposed how overstretched the rally had been. Fritsch also highlights greed and fear of missing out as contributors to the January spike.
Silver and other commodities
Gold is not alone in seeing strong interest; silver has also been expensive. Views diverge on whether silver’s rise is sustainable. Wrzesniok-Roßbach sees firm fundamentals supporting a permanently higher silver price, driven partly by electrification and expanding solar capacity. He believes silver could stabilize at much higher levels, potentially above $100 per ounce.
Frank Schallenberger, a commodities expert at Landesbank Baden-Württemberg (LBBW), is more cautious. He expects silver demand to face headwinds from slowing solar-sector growth, a weak global economy, and declining jewelry purchases, all of which could cool prices. Schallenberger warns that continued outflows from silver exchange-traded commodities (ETCs) this year might flip the market from a supply deficit into a surplus.
Outlook for gold
Analysts urge caution on gold’s near-term trajectory. Schallenberger notes that weak jewelry demand and central banks’ reluctance to add to reserves could temper the recent rally. He also points to US policy as an ongoing source of market uncertainty that could provoke sudden reactions.
Fritsch says a resolution of the conflict could lead to weaker dollar and oil prices, which would generally be supportive for gold and silver. Ultimately, he adds, whether prices head higher depends on how rising oil affects inflation and how central banks respond.
Despite the mixed signals, gold’s role as a safe-haven asset means it will likely remain attractive to investors during uncertain times.
This article was originally published in German.
