Why is 'safe haven' gold underperforming amid rising oil prices? Key factors explained

Precious metal gold prices have significantly underperformed over the last two weeks despite the escalating tensions in West Asia and rising oil prices. There are multiple factors influencing gold rates including higher interest rates and a stronger US dollar amid frequent exchange of attacks between the United States and Iran.

Data showed that the gold prices have lost nearly 4% since the conflict started on Saturday, February 28, 2026, after United States attacked Iran in effort of a regime change with the help air strikes and Israel as the forces on the ground.

The US-Iran conflict since then has skyrocketed global crude oil prices, while creating a supply crunch-like situation due to Iran’s geographically strategic control over the Strait of Hormuz, a key maritime trade chokepoint in the Persian Gulf.

Why are gold prices underperforming?

Since the attacks, the ‘safe haven’ gold prices have been witnessing intense selling pressure from global market investors resulting in a sharp fall over the last two weeks. Market investors are now looking at the factors which are influencing gold rates other than the conventional geopolitical trigger.

Higher interest rates, economic inflation, liquidity, currency rates, along with the demand and supply aspect of the commodity, contributes to the recent downward trend of the precious metal gold. After witnessing a 94% rally between March 2025 to beginning of March 2026 over concerns of US economic stability, gold prices are now directly under influence of the global inflation factor.

The US Labor Bureau data showed that the CPI inflation rose by 3% for February 2026, compared to a 2% level rise in January 2026. The trend is somewhat similar as retail inflation in the Indian economy rose 3.21% in February, compared to a 2.74% in January 2026.

Taking a look at the US Dollar, the Bloomberg US Dollar spot prices showed that the greenback has gained 0.38% to 100.09 as of 2:10 a.m. (EDT), on the backdrop of investors looking to hold a stronger currency in hand, which is in demand for the global energy trade undergoing disruptions due to the Iran attacks.

With a stronger dollar index amid inflation issues, the precious metals gains are being weighed down even if higher interest rates from central banks around the world pushes money into US bonds, gold, silver, among other widely considered safe haven assets.

Gold prices and the US dollar rates have an inverse relation as the commodity is traded globally using the US greenback. Hence, if the US dollar rate strengthens, then the currency in turn gains higher purchasing power, which weighs down on the gold rates. Investors buying gold will be able to purchase lesser quantity of the precious yellow metal if the dollar keeps rising hence marking the inverse factor.

How much has gold lost since US-Iran conflict?

Gold prices have lost 3.9%, falling ₹6,368 per 10 grams to ₹155,736 per 10 grams over the last two weeks as of market close on March 16 amid the escalating conflict in West Asia, compared to ₹162,104 per 10 grams at the market close levels before US President Donald Trump launched attacks on Iran.

The Multi-Commodity Exchange (MCX) data showed that the gold prices for the April 2026 futures contract were trading 0.82% or ₹1,280 per 10 grams higher at ₹157,016 per 10 grams as of 11:22 a.m. (IST) on Tuesday, March 17, compared to ₹155,736 at the previous commodity market close.

The New York-based COMEX gold was trading 0.54% lower at $5,029.80 per ounce as of 1:54 a.m. (EDT) on Tuesday, compared to $5,002.20 per ounce at the previous commodity market close, the exchange data showed. COMEX gold has lost 4.6% or $245 per ounce since the beginning of the US-Iran conflict.

Despite the geopolitical uncertainty over the US-Iran conflict, the gold prices have underperformed as compared to the massive surge in oil prices. Commodities like gold are preferred by global market investors in times of heightened uncertainty as they are considered ‘safe haven’ assets.

How have oil prices fared since the conflict?

In comparison to gold, the conflict is directly influencing crude oil prices and investor sentiment due to the supply-related uncertainty over frequent attacks on the Strait of Hormuz potentially disrupting the trade flow of oil from West Asian Gulf countries to the Eastern Hemisphere.

Over the last two weeks, Brent crude oil prices have surged nearly 40% hovering over the $100 per barrel (bbl) psychological mark amid the looming tensions in West Asia and investors awaiting a relief from either side for the conflict to end.

In the second week of the conflict, the oil prices hit a record high of $119.50 per bbl, but the commodity soon cooled down after President Trump’s signal that the conflict would potentially end soon. At the same time International Energy Agency's (IEA) announced a 400 million barrel oil reserve release to cater to the global demand.

As the conflict entered its third week starting from Monday, March 16, the Brent crude oil prices were trading 3.79% higher at $104 per bbl as of 12:27 p.m. (IST), after Iran’s recent drone attacks on United Arab Emirates’ (UAE) oil and natural gas infrastructure, as retaliation to the United States.