Gold fails to deliver the usual crisis surge. Analysts explain why
Dollar strength, rising yields and profit taking slow the usual crisis rally
Dubai: Gold has long been viewed as the ultimate refuge during global turmoil. Wars, financial crises and inflation shocks have traditionally sent investors rushing into bullion, often pushing prices sharply higher within days.
This time, the reaction has been far more restrained.
Prices have remained elevated, yet the explosive rally many expected after tensions escalated in the Middle East has not fully materialised. Analysts say a mix of macroeconomic forces, market positioning and investor behaviour has tempered the traditional crisis-driven surge.
A volatile month for Dubai gold buyers
Dubai gold prices have swung sharply through February and early March, reflecting global uncertainty and shifting expectations around interest rates.
Retail prices for 24K gold stood at Dh623 per gram on March 10, compared with Dh615.75 on March 9. Earlier in the month, the rate touched Dh641 on March 2, one of the highest points during the recent rally. Prices then eased through the following days before stabilising in the Dh620 range.
February showed similar volatility. Prices rose from around Dh590 in mid-February to above Dh636 by the end of the month, when the conflict first broke out. The swings highlight how closely Dubai’s retail market tracks global bullion movements.
Despite the tensions, the rally has been uneven.
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Strong dollar and rising yields weigh on gold
Several macro forces have capped the metal’s upside.
Zaheer Anwari, co-founder and CEO of The Revacy Fund, said currency and interest rate dynamics have been working against gold even while geopolitical risks remain elevated.
“Gold is facing headwinds despite the elevated geopolitical uncertainty due to the dollar’s strength,” Anwari said. “The currency rose to multi week highs.”
Higher oil prices have also complicated the picture.
The closure of the Strait of Hormuz pushed crude prices above $100 a barrel, reviving inflation fears and prompting investors to reconsider how quickly central banks might cut interest rates.
The near-term outlook for gold remains data-dependent. While geopolitical tensions in the Middle East continue to fuel inflationary pressures, keeping the dollar firm and yields elevated, the macro backdrop could continue to shift.
“That prompted investors to price in a more cautious Federal Reserve through 2026,” Anwari said. Treasury yields have climbed across the curve, with the 10-year reaching a multi-week high. Rising yields increase the cost of holding gold, which does not generate interest.
Even so, Anwari believes the longer-term trend remains intact. After surging more than 170% from late 2023 to early 2026, bullion may be consolidating.
“Once geopolitical factors align and are conducive to gold's next move, we could see the next uptrend phase push prices up, potentially toward the $10,000 level,” he said.
Safe haven psychology still drives demand
The instinctive rush toward gold during crises remains deeply rooted in investor psychology.
Daniel Takieddine, co-founder and CEO of Sky Links Capital Group, said households often turn to gold immediately when uncertainty rises.
“Households often rush to buy gold at the onset of a crisis as a shield against uncertainty,” he said, adding that the metal’s tangible nature creates a psychological sense of control during periods of market stress.
Gold’s appeal comes from its independence from financial institutions.
Uncertainty drives gold prices up through both psychological and macroeconomic channels. Behaviorally, uncertainty and risk aversion push individuals to buy gold as a tangible, culturally familiar safe haven. Simultaneously, periods of stress trigger rapid "flight-to-safety" flows into gold assets. As crises shift market expectations toward lower interest rates and persistent inflation, falling yields reduce the opportunity cost of holding non-yielding assets like gold.
“Gold serves as a straightforward and culturally familiar safe haven asset and benefits from its enduring reputation as a reliable store of value during periods of market stress,” Takieddine said.
Charu Chanana, chief investment strategist at Saxo Bank, echoed that view, noting that investors gravitate toward gold when the future becomes difficult to predict.
“Gold is the safety reflex when outcomes are unclear. People hate uncertainty more than bad news,” Chanana said.
Yet she pointed out that gold rallies can sometimes stall during periods of extreme market stress.
“Sharp risk selloffs can also trigger brief gold pullbacks as investors raise cash for liquidity needs,” she said.
Gold can react within minutes because it trades globally and continuously and hedging flows are fast. Spikes fade if tensions de-escalate, but can persist if the shock becomes macro such as sticky inflation, falling real yields, or policy easing. However, it is worth noting that sharp risk selloffs can also trigger brief gold pullbacks as investors raise cash for liquidity needs.
Retail buyers and institutions behave differently
Investor behaviour also plays a role in shaping gold’s price reaction.
Retail investors often buy physical gold as emotional insurance against economic uncertainty.
Vijay Valecha, chief investment officer at Century Financial, described gold as a form of “financial comfort” during times of crisis.
“Gold is tangible and universally recognised as an asset that represents safety independent of government or corporate stability,” Valecha said.
Institutional investors, however, approach gold more strategically. Large funds use the metal as a portfolio hedge rather than a reaction to headlines.
“Retail buyers usually purchase gold out of fear and because they want to protect their capital,” Valecha said. “Institutional investors follow a more strategic approach and see gold as a portfolio hedge.”
Gold is always protective in times of uncertainty. It outperforms all major asset classes during stressful periods. Its safe-haven status is attributed to its characteristic of providing a hedge against market-related risk. For example, in 2025, it gave almost 70%, outperforming every major asset class amid geopolitical tensions and tariff wars. It is also widely tradable and liquid offering retail investors easy entry points.
These differences can shape how quickly prices move.
Gold often reacts within hours of geopolitical news, yet the surge can fade quickly if markets believe the crisis will remain contained.
Dubai retail demand remains strong
Retail activity in Dubai suggests underlying demand has remained steady even as prices fluctuate.
Rashid Alharmoodi, senior director, commercial, at Ithra Dubai, said gold has historically strengthened during periods of volatility, but prices rarely move in a straight line.
“Gold prices are typically influenced by a combination of macroeconomic factors rather than any single development,” he said.
While short-term fluctuations can occur, the broader fundamentals supporting gold demand remain stable, particularly in markets like Dubai where transparency, liquidity and established trading infrastructure continue to reinforce investor confidence.
Recent corrections are part of a normal market cycle following strong rallies.
“Periods of price consolidation often follow strong rallies and tend to encourage more active participation from investors who closely monitor price movements,” Alharmoodi said.
Retail demand across the Dubai Gold District has remained resilient.
Al Romaizan Jewellery reported that demand for gold has increased by around 6% in recent weeks across jewellery and bullion categories.
Mohsin Al Dhaibani, vice regional manager at Al Romaizan Jewellery, said buyers in Dubai are becoming more strategic in their approach to the market.
Over the past two weeks, bullion sales volumes have increased by approximately 5–10%, particularly in smaller investment sizes ranging from 1 gram to 50 grams, indicating growing participation from individual and family investors looking to gradually build their gold holdings.
“Some customers prefer to monitor price movements and enter the market during corrections, while others continue to purchase steadily as part of a longer term investment approach,” he said.
Bullion traders are also seeing fresh interest from individual investors.
Latest development
Gold prices moved higher again on Tuesday after a shift in geopolitical expectations.
Bullion advanced after US President Donald Trump signalled that the Middle East conflict could be nearing an end. Gold rose as much as 0.9% to top $5,180 an ounce, recovering losses from the previous session. (Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)
Oil prices dropped more than 10%, while the dollar weakened slightly.
Markets have been closely watching the impact of the conflict with Iran, now in its second week. The effective closure of the Strait of Hormuz and missile strikes on energy infrastructure have pushed oil prices higher and raised concerns about inflation.
Higher inflation expectations have reduced the likelihood of interest rate cuts by the Federal Reserve and other central banks. Elevated borrowing costs tend to weigh on gold because the metal does not offer interest.
Exchange-traded funds have also seen outflows.
Total gold holdings in ETFs fell by nearly 30 tonnes last week, the largest weekly decline in more than two years.
Despite the turbulence, bullion remains firmly in demand. Gold has gained around 20% this year, supported by geopolitical tensions, trade uncertainty and investor demand for defensive assets.
Markets now await the next catalyst, which analysts say will determine whether gold resumes its rally or remains trapped in a volatile consolidation phase.
- With inputs from Bloomberg.
