Gold Myth Busted: War Doesn’t Always Push Prices Up; Data Shows Drops After Initial Spike

A common belief among investors is that gold prices always rise during wars due to fear and safe-haven demand. However, historical data from major conflicts like the Gulf War (1990), Iraq War (2003), Russia–Georgia (2008), and Russia–Ukraine (2022) shows a different reality. In many cases, gold either fell or corrected sharply after an initial spike. The key drivers behind gold prices are not war alone, but macroeconomic factors such as interest rates, US dollar strength, and liquidity conditions. For example, during the Russia–Ukraine war, gold initially surged but later declined as the US Federal Reserve aggressively raised interest rates, strengthening the dollar. Currently, rising oil prices are fueling inflation concerns, which may delay interest rate cuts. Higher interest rates make gold less attractive compared to interest-bearing assets like bonds. Additionally, a strong dollar reduces global demand for gold. Experts also highlight that after a strong rally in recent years, profit booking by large investors has added further pressure on prices. While short-term volatility may continue, the long-term outlook for gold remains supported by central bank buying, geopolitical risks, and limited supply.