Has gold had its time in the sun?

Why gold is not behaving like a safe-haven asset"

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Relations among the major powers keep shifting. Tensions are rising, and sharp market swings are occurring more often. Gold has largely lived up to its reputation as a "safe-haven asset" during the uncertainty of recent years.1 Between 2024 and 2025, its price reached more than 90 record highs.2

More recently, gold pulled back by more than -13% between 1st March and 1st May.3 The timing almost exactly matches the Iran crisis, which seems to call its safe-haven reputation into question. Why did gold fail to respond as expected? Has it stopped being a safe-haven asset? The answer is less clear-cut.

How does gold perform during and after major crises?

Gold has long attracted investors seeking protection when uncertainty rises. It pays no income and depends little on industrial demand; its price rests largely on what investors believe it is worth.

Recent crises have followed much the same pattern. The 2008 financial crash rattled markets, yet gold had already moved comfortably above its pre-crisis price by March 2009. It then posted strong gains through the latter half of 2009, across 2010, and for most of 2011. Gold also reached a record high above £2,000/oz by early August 2020 during the Covid-19 pandemic. After Russia invaded Ukraine in 2022, prices jumped at first and later set new records.

However, that is not the whole picture. Gold held up during and after these crises, but its path was uneven. Prices often fell first and volatility rose sharply. During the 2008 crash, gold swung widely and suffered two major dips. When Covid-19 began, it dropped to £1,451/oz in March 2020 before recovering.4

Gold

Source: World Gold Council. Data as of 01.05.2026. For illustrative purposes only. Past performance does not indicate future performance.

Market stress has often produced the same sequence: gold falls at the start of a crisis, then recovers and moves into a broader bull phase.5

Liquidity largely explains the pattern. Under pressure, investors sell whatever they can - not always what they want to sell. Gold is highly liquid, so it often becomes an early source of cash when investors need to meet margin calls or cover losses in other positions.6 That forced selling can drag prices down for a time, even when broader conditions would normally favor gold. Recent developments fit that pattern.

The worsening situation in Iran and the market swings that followed may have prompted investors to sell across their portfolios, gold included, as they try to limit losses.

Other factors at play

Several broader economic pressures are also weighing on markets in the short term.

The Iran conflict has pushed oil prices higher, renewed inflation fears, and made near-term rate cuts look less likely. If interest rates stay elevated for longer, investors face a greater cost for holding assets that pay no income, including gold, which can put pressure on its valuation.

Second, currency movements are adding pressure. Gold is priced in US dollars, so a stronger dollar usually weighs on demand. The US Dollar Index rose above 100 in March, raising gold's cost for investors using other currencies and helping push prices lower - one of the year's sharper declines.8

Taken together, these forces should have supported gold, yet they have put it under short-term pressure instead.

Does gold still offer a safe haven?

Gold's safe-haven status remains intact, even when short-term forces push its price in another direction. During severe market stress, urgent liquidity needs, changing interest-rate expectations, or a stronger currency can outweigh gold's usual supports for a time; its defensive qualities may reappear later.9 Central-bank purchases, de-dollarisation, and declining confidence in the rules-based international order continue to support gold's potential as a medium-term safe haven.10

For investors outside the United States, gold can still provide protection against a weaker local currency. The dollar's strength has held down gold's price in USD terms, but that effect has not been uniform. Measured in euros, gold climbed from about 1,850 to 3,700 per ounce between 2024 and late 2025. Japanese and Chinese investors gained even more: gold's value more than doubled, helped by the yen's and yuan's respective declines against the dollar.11

Gold's safe-haven status has not disappeared, but it comes with conditions. The latest correction does not undo the longer-term case for owning gold: geopolitical tensions remain high, central banks continue to buy, de-dollarisation is advancing, and concerns about U.S. fiscal policy are growing. A weaker dollar - whether caused by rate cuts, fading demand for dollar safety, or a rapid, complete resolution of the Iran conflict - could quickly remove much of the short-term pressure weighing on gold. If and when the Fed pivots, lower U.S. Treasury yields would also reduce the cost of holding an asset that pays no income.

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