Gold Prices: Volatility Persists Amid US-Iran Conflict

Key Figures:

• Gold Price: $4,550 an ounce
• Decline from February 28, 2026: 15%
• Weekly Decline: 2%
• Central Bank Gold Sales: 60 tonnes, valued at over $8 billion

Market Analysis

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Gold prices have remained highly volatile since the onset of the US-Iran conflict, with the precious metal declining sharply by nearly 15% from its February 28, 2026 levels. During the week, bullion remained under pressure, closing in the red in three out of five sessions and ending with an overall decline of around 2%. However, gold staged a sharp rebound toward the end of the week, surging as much as 4.1% on Friday to cross $4,550 an ounce.

Drivers of Gold Prices

The metal's rebound reflects renewed buying interest at lower levels. However, bearish sentiment continues to weigh on gold as uncertainty persists over the chances of a ceasefire. The US and Israel carried out strikes on Iranian nuclear and steel facilities, prompting retaliation from Iran across the Persian Gulf, which dragged markets lower and pushed oil prices higher.

Central Bank Influence

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The escalation of the conflict has put pressure on gold prices, as central banks may be compelled to liquidate gold reserves to meet dollar-denominated liabilities. Turkey's central bank, for instance, sold and swapped nearly 60 tonnes of gold over a two-week period, valued at over $8 billion. This move has raised concerns that other monetary authorities may adopt a similar approach, potentially slowing overall demand and challenging the assumption that central banks are reluctant to offload gold.

Market Outlook

According to market experts, the commodities market enters the week in a phase of measured stabilisation following last week's sharp correction. While safe-haven demand has moderated slightly, underlying uncertainty continues to provide intermittent support to bullion. The broader macro backdrop remains supportive, although near-term momentum is likely to remain influenced by currency movements and geopolitical developments.

Expert Views

• Ponmudi R, CEO of Enrich Money: "Overall, sentiment remains cautiously balanced, with markets transitioning from a corrective phase toward gradual recovery. A selective buy-on-dips approach near key support zones remains preferable."
• Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities: "Despite the bounce, sentiment remains cautious as macro triggers still favor higher interest rates. Overall, gold is likely to stay volatile with limited upside unless clarity emerges on inflation and geopolitics."