Gold has dropped 22% since the Iran conflict began on Feb 28, ending its years‑long rally. Geopolitical tension usually boosts gold, but investors now expect the Fed to raise rates, making cash more attractive than a yield‑free asset.

UBS strategist Giovanni Staunovo notes gold thrives when real, inflation‑adjusted rates fall. With rising rate expectations, the dip intensifies. Rumors of Middle‑East central banks selling gold surfaced, but only Turkey confirmed a sale of 81 metric tons, worth $10.6 billion, in H1 2024 per the World Gold Council.

Gold’s 12‑month gain of 21% still outpaces the S&P 500, confirming its hedge role. Short‑term price swings don’t erase its long‑term appeal, especially if central banks view gold as a liquidity buffer during crises, reinforcing its reserve asset status.

For investors, the dip offers a buying window. A lower price can make gold a more cost‑effective hedge against inflation and instability, while its track record supports a spot in diversified portfolios.