Gold prices fall over 10% since US-Iran war. 5 reasons why safe-haven asset is under pressure

Gold prices fell on Wednesday, April 15, with futures trading on the Multi Commodity Exchange slipping by ₹353, or 0.23%, to ₹1,54,464 per 10 grams for June delivery, due to lower demand in the spot market.

Investors booked gains after gold prices reached a one-month peak earlier in the session on increased risk appetite following hopes of renewed peace negotiations between the United States and Iran.

In the international market today, spot gold slipped 0.6% to $4,811.19 per ounce, while US gold futures for June delivery fell 0.3% to $4,834.40.

US President Donald Trump indicated that talks to end the Iran conflict could resume in Pakistan over the next two days following the breakdown of weekend negotiations.

Gold prices down 10% since US-Iran conflict

In a month or so, the gold price trend has remained weak despite the Middle East conflict.

Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities, highlighted that since the escalation of conflict in West Asia at the end of February, gold has declined consistently on a weekly basis. From its recent peak on March 2, spot gold has been corrected by around 10%.

While gold is traditionally viewed as a safe-haven asset during geopolitical tensions, its recent price action has diverged due to a shift in the broader macroeconomic environment.

Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, said that gold's pullback isn't a contradiction; it's a correction. Gulati believes that geopolitics creates headlines, macro fundamentals create price, and right now, the fundamentals are winning.

"But zoom out. Every reserve currency in world history — the Dutch guilder, the British pound, the Roman denarius — has eventually fallen. Gold has outlasted them all. This dip doesn't change my view. I am, and remain, a long-term bull," added Gulati.

Key reasons why gold prices are falling amid geopolitical tensions

Experts believe gold’s decline, despite geopolitical tensions, stems from interconnected forces listed below:

Higher interest rates weigh on gold

Higher crude oil prices may push central banks to hike interest rates, which does not bode well for non-yielding bullion. Higher interest rates generally exert downward pressure on gold since it does not provide any yield, making interest-generating assets such as bonds and cash more appealing.

Stronger US dollar adds pressure

Simultaneously, a stronger US dollar adds extra strain on gold prices as it becomes pricier for those purchasing in other currencies, which reduces demand. According to Gulati, despite the geopolitical noise, a resilient dollar makes gold expensive for foreign buyers.

Hareesh V, Head of Commodity Research, Geojit Investments Ltd, also believes that a stronger US dollar has made gold costlier for overseas buyers.

Rising bond yields increase competition

Increasing bond yields further intensify competition by offering more attractive returns on fixed-income investments, leading to a move away from non-yielding assets like gold.

Gulati said the decline was driven by a combination of factors: rising US real yields, which offer investors positive returns and reduce gold’s appeal; early signs of geopolitical de-escalation, leading to a pullback in the safe-haven premium; profit-booking by institutional investors after the recent rally — a classic “sell-the-news” move; and ETF outflows, signalling weakening investor conviction.

Liquidity needs trigger selling

During times of market distress, investors may also liquidate gold to secure liquidity, realise profits, or fulfil margin calls, resulting in temporary price drops.

Hareesh V noted that profit-taking after the 2025 rally to record highs triggered momentum-driven selling, compounded by liquidity shifts and central bank reserve adjustments that pressured demand.

Conflict already priced in

Furthermore, if gold has already surged due to geopolitical concerns, prices may adjust downward as markets re-evaluate risks and investors solidify their profits.

Hareesh added that technical corrections after last year’s parabolic rise saw breakdowns below key support levels, accelerating losses.

Further, Gandhi opined that looking ahead, if geopolitical tensions persist, market focus may gradually shift toward global growth risks or the potential for recession, which could bolster safe-haven demand for gold in the long term. However, in the short term, gold remains highly sensitive to fluctuations in crude oil, exhibiting a notable inverse relationship.

According to Gandhi, a continued decline in oil prices could support further gains in gold, while any rebound in crude oil may exert downward pressure on the metal.

Technical Outlook

Commenting on the technical outlook, Gandhi said, "In the short term (10–15 days), gold appears to be in a recovery phase, with potential upside toward $5,025–$5,100, provided prices hold above $4,529. On MCX, gold is expected to recover toward ₹159,000– ₹161,180 as long as it sustains above the ₹147,100 support level. From a medium-term perspective, spot gold is likely to consolidate within a broad range of $4,150–$5,250, while MCX gold may trade between ₹142,300 and ₹161,100."

Om Mehra, Technical Research Analyst, SAMCO Securities believes that gold has faced clear rejection near its recent highs, forming a strong zone around the $5,500 level on global charts. In the near term, $5,200–5,100 continues to act as an immediate hurdle, where prices are struggling to sustain. On the downside, $4,600–4,500 is acting as a key support zone, and a break below this could extend the decline.

Mehra added that on the MCX, gold remains capped below ₹160,000– ₹162,000, aligning with the recent spike zone. Immediate support is seen near ₹148,000– ₹145,000, and a breach of this range may lead to further downside.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.