Why Hasn’t the Iran War Pushed Gold Even Higher?

Gold prices reached record highs in early 2026 following an epic 2025, fueled by central bank buying, inflation concerns, and demand for assets outside traditional finance. Since then, gold has pulled back significantly. Conditions created by the US-Iran war that began last February have contributed to this correction, but why? 

While gold is usually pumped by geopolitical uncertainty, the conflict has led some governments and central banks to sell gold to meet short-term cash needs. Disruptions in the Strait of Hormuz have affected oil exports and energy supplies, putting pressure on budgets and foreign exchange reserves. 

Governments have prioritized rebuilding fuel supplies and stabilizing currencies, which requires dollars more than long-term stores of value in the short term. And with higher oil prices threatening to rip higher still, markets are considering the prospect of central bank interest rate hikes to counteract rising inflation.

Turkey has sold or lent gold reserves to support the lira amid economic pressures from higher energy costs. Russia has also reduced holdings to address fiscal demands. These sales have added to supply in the market at a time when gold entered the conflict period looking technically overbought after its prior rally.