Gold's Safe-Haven Status Under Fire as Oil Surges Amid Geopolitical Tensions
The precious metal's usual crisis playbook has been torn up this week as military strikes near the Strait of Hormuz have sent investors scrambling into oil, rather than gold. Typically, such geopolitical tensions drive investors to safe-haven assets like gold, but instead, bullion is nursing its steepest slide in months while crude prices surge past $92 a barrel.
The trigger for the latest leg lower was a US strike on Iranian rocket launchers near the strait, followed by Iranian retaliation against targets in the United Arab Emirates and Jordan. The market's response has been counterintuitive, with investors piling into the dollar and Treasuries rather than gold.
According to analysts, the mechanics explain the paradox. Rising oil prices stoke inflation fears, which in turn push bond yields and the dollar higher as traders price in a more aggressive Federal Reserve response. The ten-year US Treasury yield climbed to 4.79 percent, its highest since January 2025.
The combination of rising real rates and a firmer dollar makes gold unattractive to investors. Central banks, however, remain firmly committed to buying gold, with purchases in the second quarter of 2026 reaching 288.9 tonnes, up 62.4 percent from the same period a year earlier.