Why gold prices are plunging amid the Iran war, despite being a supposedly safe asset
abcnews.com • • business
Key Points:
- Gold prices have dropped 13% since the outbreak of war with Iran, defying its traditional role as a safe-haven asset during geopolitical crises.
- Other assets have fared better amid the Middle East conflict, with the S&P 500 down 7%, Nasdaq down 8%, and Bitcoin only declining 2%.
- The gold selloff is attributed to factors such as its high pre-war price, the appeal of other low-risk assets like rising Treasury bond yields, and gold's inconsistent safe-haven performance.
- Despite the recent decline, gold remains nearly 50% higher than a year ago after hitting an all-time high of nearly $5,600 per ounce in January, making it vulnerable to a selloff following such peaks.
- Analysts remain cautiously optimistic about gold's long-term prospects, noting its strong five-year performance and historical tendency to perform well over extended periods despite short-term volatility.
