Geopolitical tensions rise, but why aren’t gold prices?

Gold Price Today

• Bullish Scenario – Global slowdown+ further geo-political escalation can result in gold prices moving higher by around 15-20% from here in 2026
• Mild Bullish – Slowdown in US growth, moderate Fed rate cuts can lead a rise of around 5-15% rise in gold prices
• Bearish – Strong US growth, sticky inflation, high interest rates can result into a correction of 5-20% in gold prices

Did our AI summary help?

The conflict between the US/Israel-Iran started on February 28, 2026, which involved attacks on Iranian leadership and infrastructure. As of today, March 13, it's almost a fortnight, gold prices traded in the range of $5,277 per ounce highs to $5,054 per ounce lows.

On the MCX, gold prices traded in the range of Rs 1,69,880 per 10 grams, i.e., highs on February 27, and Rs 1,59,350 as of March 13.

Bone of Contention – Why did the US/Israel attack Iran? How long will it last?

The US/Israel were not happy with the increasing progress of nuclear weapons by Iran. So, they targeted sites linked to Iran’s nuclear programme, and these targets led to the death of Iran’s supreme leader, Ayatollah Ali Khamenei, who has been leading the country since 1989. This war has now escalated and created a geopolitical risk premium for commodities and disrupted the smooth flow of oil and gas through the Strait of Hormuz, the key canal through which 20 percent of oil shipments travel.

Why are gold prices not rising despite the heightened geopolitical risk?

The escalation of war in West Asia has escalated to neighboring countries like Saudi Arabia, Lebanon, Iraq, and the UAE. In a perfect world, chaos and uncertainty like these events would raise gold prices. However, since the war started, gold prices have remained in a consolidation phase, trading in the $300-per-ounce range in international markets. At the same time, it trades in the Rs 10,000-per-10-grams range on the MCX futures, as mentioned in the earlier report.

Due to the closure of the Strait of Hormuz, risk premiums in oil prices increased significantly, and WTI crude has risen from lows of $60 a barrel to highs of $110 a barrel, leading to inflationary risk across the globe. Moreover, investors globally are moving towards the safe-haven currency “Dollar”, which has strengthened in recent weeks.

A stronger dollar and a higher inflationary environment, in turn, are hindering gold prices from rising, despite the geopolitical risks arising from the war. Since higher interest rates and a stronger dollar move inversely to gold prices, gold has lost momentum and is consolidating.

What now? Where are gold prices headed?

Gold is trading near $5,165 per ounce, having surged more than 80 percent over the past year, reaching more than 50 all-time highs in 2025 alone. The metal is caught in a tug-of-war between persistent geopolitical stress, central bank demand, Federal Reserve policy uncertainty, and the potential for economic reflation.

Three possible scenarios can be panned out in the current environment

Bullish Scenario – Global slowdown + further geopolitical escalation can result in gold prices moving higher by around 15-20 percent from current levels in 2026

Mild Bullish – A slowdown in US growth and moderate Fed rate cuts can lead to a 5-15 percent rise in gold prices.

Bearish – Strong US growth, sticky inflation, and high interest rates can result in a correction of 5-20 percent in gold prices. (This situation looks unlikely at present.)