Why gold prices are plunging amid the Iran war, despite being a supposedly safe asset
abcnews.com • • business
Key Points:
- Gold prices have fallen 13% since the outbreak of war with Iran, defying its usual role as a safe-haven asset during geopolitical crises.
- Other assets have been more resilient, with the S&P 500 down 7%, Nasdaq down 8%, and Bitcoin only declining 2% since the conflict began.
- The gold selloff is attributed to factors such as gold's high pre-war price, the attractiveness of other low-risk assets like Treasury bonds, and gold's inconsistent safe-haven performance.
- Treasury bond yields have risen to about 4.45%, making bonds more appealing due to their interest payouts, while gold offers no yield, reducing its attractiveness amid high interest rates.
- Despite recent volatility, experts remain optimistic about gold's long-term value, noting it has increased nearly 160% over the past five years and historically performed well during major market selloffs.
