Gold, long regarded as a safe-haven asset during periods of uncertainty, has moved in the opposite direction this time. International prices have fallen more than 25% from their peak of $5,586 earlier this year, even as investors grapple with geopolitical tensions and a rapidly escalating conflict in West Asia. If the decline continues, it could mark gold’s worst annual performance since 2013, when the precious metal tumbled 28%.
The drop comes despite more than 100 days of no breakthrough in peace talks involving the United States, Israel and Iran. Over the same period, benchmark indices, the Nifty and Sensex, have fallen more than 9% each, while crude oil, the world’s most important commodity hovering near the $90-per-barrel mark, has become the new normal, unsettling global markets. Traditionally, such conditions tend to support precious metals. The recent decline may appear counterintuitive given gold’s reputation as a refuge during geopolitical turmoil. However, current market dynamics are being shaped by several overlapping factors.
