Safe Haven Assets Losing Their Shine? Iran Conflict Escalates as Gold Breaks Below $5000

Cailian Press, March 16 (Editor Liu Rui) On Monday during Asian trading hours, the spot gold price fell below the key psychological level of $5,000 per ounce.

As market concerns over energy inflation triggered by the Iran war persist, and with little sign of easing in this conflict, gold has been declining continuously over the past two weeks.

This has not only caused confusion among investors—since gold is traditionally considered the king of safe-haven assets—why is its safe-haven property not working this time?

Spot gold price broke below $5,000 early this morning

On Monday morning, spot gold opened with a rapid plunge, quickly falling below $5,000, with a low of $4,966. However, by the time of writing, the decline narrowed to 0.25%, returning above $5,000; meanwhile, gold futures also dropped as much as 1.3% to $4,996.96 per ounce. This is the first time in nearly a month that spot gold has fallen below the $5,000 mark.

Apart from gold, spot silver also dropped 1.8% to $79.18 per ounce early this morning, breaking the $80 level, but the decline narrowed to 1.2% by the time of writing; spot platinum rose 1.1% to $2,050 per ounce.

The main culprit for the early morning decline in gold prices is the ongoing tension in Iran, which still shows no signs of easing.

Earlier, the U.S. bombed Iran’s main energy hub, Kharg Island, over the weekend, prompting strong retaliation from Iran. Iran threatened to escalate Middle East conflicts further, stating it would target any U.S.-related facilities in the region. On Monday morning, international oil prices continued to surge, with WTI crude oil breaking above $100 per barrel again.

However, on Monday, due to U.S. President Trump’s statement that negotiations are underway to form a convoy alliance to reopen the crucial Strait of Hormuz, the increase in international oil prices was somewhat contained.

Is the safe-haven property failing?

Gold prices are largely influenced by geopolitical tensions—yet, as the traditional safe-haven king, gold seems to be underperforming this time.

Since the outbreak of the Iran conflict, gold has been weak. Over the nearly two weeks since the conflict began, gold has fallen more than 6%.

Analysts point out that although gold is a safe-haven asset, investors are more worried that the inflationary shock caused by the Iran war will lead the Federal Reserve to delay interest rate cuts. The prolonged high-interest-rate environment is expected to boost the dollar and suppress gold prices.

Moreover, the Federal Reserve is set to hold its March monetary policy meeting this week. Market caution ahead of the meeting has also put further pressure on gold prices—fears that the Fed might adopt a hawkish stance amid ongoing inflation.

ANZ Bank analysts wrote in a recent report:

“Due to the strengthening dollar, rising yields, and uncertainty over Fed policy, gold has been impacted. Margin calls from traders closing positions also affected gold prices.”

However, ANZ Bank analysts note that gold remains a safe-haven asset for geopolitical uncertainties, and this fundamental fact has not changed. Therefore, gold should not be overly underestimated.