By Ariel Rabinovitch Global News
Posted March 3, 2026 4:09 pm
The Iran war continues to roil global markets, but gold isn’t shining so brightly right now even though many have long considered it a safe haven during a crisis.
Gold prices fell about four per cent on Tuesday to roughly $5,124 an ounce as of publication, and some experts say this dip is because of strength in the U.S. dollar.
“The dollar is absolutely roaring away, as are U.S. Treasuries, and that’s providing a strong headwind to gold and particularly silver,” said independent analyst Ross Norman in an interview with Reuters.
Commodities like gold and oil are priced in U.S. dollars because it is considered the most widely-used currency and tied to the world’s most powerful economy.
This means a stronger U.S. dollar will usually drive down the price of these commodities because it takes fewer dollars to buy them.
“One of the issues with gold right now is it had such a run recently and the speculation has reached a fever pitch,” says Colin White, CEO of Verecan Capital Management.
“It’s more fragile right now at this moment in time. So that’s what kind of goes in the face of, ‘It’s always a safe haven’ — nothing’s always anything.”
The Iran conflict impacting the global economy
On Saturday, the U.S. and Israel launched strikes on Iran and sparked a new conflict in the already tense and volatile Middle East region.
Concerns about how long this conflict could go on and if things will escalate are potential reasons investing experts say the U.S. dollar is getting more appealing right now.
“When the world gets really, really, really, really scary, USD [U.S. dollar] seems to carry the day, right? And that for no other reason than it’s the USD,” says White.
“The whole world trades based on confidence, right? So money flows where there’s confidence. And when there’s no other place you can get any confidence, the global vote is USD, and I think that that’s playing out again this time.”
This means the U.S. dollar may currently be considered a stronger asset than gold, and reflective of investors’ confidence in the U.S. amid the Iran conflict.
At the same time, stock markets like Wall Street sold off at the start of trading on Tuesday.
Iran launched counterstrikes on U.S. military infrastructure, embassies in allied nations like Saudi Arabia, and nearby oil and gas facilities.
Iran also effectively closed the Strait of Hormuz, a vital shipping route that sees a fifth of the world’s oil, by threatening any ships that try to pass through the area.
This is jeopardizing the world’s oil supply the longer the conflict goes on, and when there’s less oil available, the price goes up.
U.S. President Donald Trump said Monday that the conflict could last four to five weeks or more.
A barrel of crude oil was hovering around $74 as of publication, and that’s up almost 20 per cent from less than $64 last Thursday.
Although a stronger U.S. dollar may lead to lower oil prices, these supply concerns are offsetting any of those potential discounts.
Then there’s the risk of inflation that higher oil prices bring.
Inflation risks
Prices for goods and services increase with time, known as inflation.
But the rate that prices increase may be about to speed up as a knock-on effect of the Iran conflict, experts say.
Higher oil prices typically lead to more expensive gasoline, including for cars, trucks, cargo ships, planes and other forms of transportation.
Businesses will usually pass these higher costs onto consumers, which drives up inflation.
“It is certainly impactful to what you’re going to be paying at the grocery store, when you go to the mall, the retail outlets, much of the economy survives on diesel, and diesel fuel prices are certainly jumping much more considerably,” says Patrick De Haan, a petroleum analyst with GasBuddy.
“So while inflation has come a long way, the attacks on Iran also begin the wheels of inflation again as energy prices start to jump in response.”
A risk of higher inflation is also a reason why gold prices are falling.
If inflation spikes, particularly in the U.S., then there is more of a chance central banks like the U.S. Federal Reserve will be forced to raise interest rates to prevent prices from getting too high.
But this means the U.S. dollar will also go up because higher borrowing costs tends to attract more foreign investment and increase the value of the local currency.
This is why gold prices are falling right now — expectations of higher interest rates in the U.S. tied to inflation risk from rising oil prices as the Iran conflict sparks concerns that supplies could run out soon.
“People are trying to find a direction and there’s a lot of uncertainty and markets hate uncertainty,” says White.
“There’s different parts of the market where things are really optimistic going into this. Other places where people were pessimistic going into this. And so that’s all playing into changing those perceptions and expectations right now. And it’s happening in real time and it’s scary and people make different decisions when they’re scared.”
Source: Global News
