Gold, why did it fall instead of rise during this war?

Geopolitical conflict escalation → Oil prices surge → Inflation expectations heat up → Federal Reserve rate cut expectations cool down → Gold prices decline.
1. Conflict pushes up oil prices
Recently, the Middle East situation has escalated, triggering serious concerns in the market about global energy supply (especially the security of transportation through the Strait of Hormuz). This directly caused international crude oil prices to soar.

2. Oil prices trigger inflation concerns
Crude oil is the "blood" of the modern economy. Rising oil prices quickly transmit to gasoline, transportation, manufacturing, and other sectors, thereby pushing up overall inflation levels. The market has begun to worry about the risk of "re-inflation."

3. Inflation changes Fed expectations
This is the most critical link. Faced with rebounding inflation pressures, the market expects the Federal Reserve to maintain high interest rates for a longer period to curb rising prices. Therefore, the previously widely expected multiple rate cuts within the year have greatly decreased in probability, and some discussions even consider restarting rate hikes.

4. Rate expectations suppress gold prices
Gold itself does not generate any interest. When the market expects interest rates to remain high, the attractiveness of holding assets like dollars and U.S. bonds increases significantly, while the "opportunity cost" of holding gold also rises accordingly. This leads to capital flowing out of the gold market and into assets like the dollar, putting enormous pressure on gold prices.

🔄 Other factors exacerbating the decline

In addition to the core logic above, several factors have jointly led to the rapid fall in gold prices:

* "Buy the rumor, sell the fact": Before the conflict fully escalated, gold prices had already experienced a significant rally, partially digesting geopolitical risks in advance. When the conflict actually occurred, profit-taking investors chose to sell gold and lock in gains, triggering a sell-off.
* Liquidity squeeze: During intense volatility in global markets, many investors and institutions face margin calls. Because gold has high liquidity, it became a preferred asset to sell first to raise cash (USD) to cover losses elsewhere.
* New safe-haven options: Some safe-haven funds flowed into the dollar, Bitcoin, or certain AI tech stocks with lower geopolitical ties, to some extent diverting funds that might have otherwise entered the gold market.

In summary, this decline in gold is not because its safe-haven attribute has completely disappeared, but rather because, under the macro narrative of "high inflation-high interest rates," its financial attributes are temporarily suppressed. The market is prioritizing trading the "inflation consequences brought by conflict" rather than the "risks of conflict itself."