Gold is doing something unusual. Despite an active military conflict in the Middle East, disrupted oil supplies, and rising inflation fears, the precious metal is trading lower. The safe-haven trade that textbooks promise has not materialised, and analysts are now questioning whether the rules have changed.
Spot gold was trading at around $5,128 per troy ounce on Monday, down from highs above $5,400 reached earlier in the conflict. The decline occurred despite ongoing geopolitical conflict in the Middle East, which had supported the metal’s value in prior weeks.
The explanation lies in a chain reaction that begins with oil. The Middle East conflict has already resulted in a spike in energy prices, which could keep inflation elevated and has decreased the chances of a United States Federal Reserve (Fed) interest rate cut. Since gold pays no interest, it becomes less attractive when rates are expected to stay high, because yield-bearing alternatives such as bonds become relatively more appealing.
Damage to energy infrastructure and stalled tanker traffic through the Strait of Hormuz have lifted the risk of sustained strength in oil, gas and refined products, stoking inflation fears and pushing back rate-cut expectations, leaving gold with little support.
The dollar is doing the rest of the work. Since Kevin Warsh’s nomination as the next Fed chair, gold’s safe-haven status has weakened, with precious metals now responding more sensitively to monetary policy expectations and dollar strength than to risk-aversion factors, according to Samsung Futures researcher Ok Ji-hoe.
The US Dollar Index demonstrated notable resilience, recently strengthening approximately 2.12% over the past month. A stronger greenback makes dollar-denominated bullion more expensive for holders of other currencies, directly suppressing demand.
There is also a technical dimension. Some market participants sold gold positions to raise cash, offsetting losses experienced in the US stock market. Analysts noted that this type of selling pressure is often temporary and linked to equity market movements, with broader supportive factors for gold remaining in place.
For Ghana, which earned over $11.6 billion from gold exports in 2025, the metal’s near-term direction matters enormously for foreign exchange reserves and government revenue. A prolonged period of gold consolidation while oil prices stay elevated would compress exactly the revenue headroom that the country’s International Monetary Fund (IMF) programme depends on.
Analysts predict gold could trade between $5,060 and $5,160 next week, contingent on US real yields and dollar movements, with the US Consumer Price Index (CPI) data release and the Fed’s rate decision on 18 March now serving as the next major catalysts for the market.
