I have been following this issue of gold and the conflicts in the Middle East for some time, and honestly, the dynamics are more complex than they seem at first glance.

What draws attention is that the international price of gold does not simply follow a "the more conflict, the higher gold goes" logic. In fact, everything depends on which force dominates at each moment: investors seeking protection or the Federal Reserve's monetary tightening.

Let’s look at historical patterns. During the Gulf War in 1991, gold rose 17% in anticipation of the conflict but fell 12% when the fighting actually began. In 2003, during the Iraq War, the same story: +35% beforehand, -13% afterward. Why? Because the U.S. demonstrated full control, inflation didn’t spike significantly, and the Fed kept the dollar strong. That suppressed gold.

So, what has changed? We are in 2026, and America’s ability to control the situation is no longer the same as 40 years ago. That changes everything.

In the short term, what we see is a classic pattern: before the conflict, gold rises because the market fears supply chain disruptions, energy crises, and seeks protection. But when the conflict actually erupts and expectations are realized, gold falls. This is because oil prices escalate, generating inflation, the Fed delays interest rate cuts, the dollar strengthens, and gold (an asset without yield) becomes too costly to hold.

But there is a critical point here: if the conflict spirals out of control and the Strait of Hormuz is truly blocked, then the story changes. Oil prices surge, sustained inflation occurs, currencies depreciate, and real interest rates fall. In this scenario, gold makes a strong comeback because it regains its functions as a monetary asset and refuge.

What really matters now are three factors. First, the Federal Reserve’s monetary policy remains the main driver. If the Fed keeps interest rates high, the dollar stays strong and gold faces pressure. If it shifts stance and starts cutting rates, gold reacts upward. Jerome Powell has made it clear that controlling inflation is a priority, but the geopolitical situation only alters the pace, not the goal.

Second, there’s that tug-of-war relationship between oil and gold in the short term. Moderately higher oil prices reinforce expectations of high interest rates, which is bad for gold. But if the conflict escalates and affects the global energy supply, then sustained inflation favors gold even with higher interest rates.

Third, and perhaps most importantly: the degree of conflict spillover. If it remains localized, large economies sell gold to buy oil, and prices fall. If it spills over completely and the economic order collapses, gold becomes uncontrollable.

Looking at the current scenario in April, gold peaked during the initial expectation phase, then fell after the conflict materialized in March, following the historical pattern. But the risk of spillover remains. Over the next 60 to 180 days, if the Fed manages to keep control, gold should return to previous levels. If not, we could see a breakout upward.

And there’s one more thing nobody should ignore: de-dollarization. Central banks continue to buy gold consistently, the world order is being reconfigured, and geopolitical fragmentation only reinforces gold’s strategic value in the long term. De-dollarization is not a passing theme; it’s a structural trend. This supports an increase in the average gold price regardless of short-term cycles.

So, basically, what we have is a game of three speeds: in the short term, gold remains weak with high volatility. In the medium term, everything depends on whether the Fed can control inflation or not. In the long term, de-dollarization and central bank demand sustain an upward trajectory. The key is to monitor which force dominates at each moment.