US Dollar May Supplant Gold as Safe-Haven Asset Amid Soaring Oil Prices Amid US-Iran Tensions

US Dollar Gains Safe-Haven Status Ahead of Gold Amid Ongoing US-Iran War

The ongoing US-Iran war has led to a significant shift in safe-haven demand, with investors increasingly turning to the US dollar instead of gold, according to market experts. Despite the US being directly involved in the conflict, the dollar index has made a strong rebound, rising over 2% in March 2026 after falling nearly 10% in 2025. This rebound has reinforced the dollar's status as a dominant currency during periods of geopolitical uncertainty.

The dollar index's resurgence comes as gold prices have slipped over 10% since the beginning of the US-Iran war. Initially, gold prices jumped by over ₹8,500 in a single day on March 2, but as the conflict intensified, gold prices began a massive downward spiral, crashing to ₹1,35,846 by March 23, a drop of roughly 14.3% from its start-of-war peak.

Market experts attribute the dollar's gain in safe-haven status to the continued relevance of the petrodollar system, wherein global oil trade remains largely denominated in dollars. As oil is the world's most traded commodity, nations are compelled to hold and transact in dollars to secure energy supplies, thereby structurally supporting demand for the currency. Ongoing supply disruptions, particularly the persistent blockade of the Strait of Hormuz, have triggered a sharp rise in crude oil prices, further boosting demand for the US dollar.

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Key Factors Underpinning the Dollar's Rise

The US, now a net oil exporter, is relatively insulated from such disruptions, unlike energy-dependent regions such as Europe and Asia. Additionally, expectations of a higher-for-longer interest rate environment in the US, driven by inflation risks stemming from elevated oil prices, are further supporting the dollar.

| Comparison of Dollar and Gold Prices | | --- | --- | | Dollar Index | 2% rise in March 2026 | | Gold Price | ₹8,500 increase on March 2, ₹1,35,846 crash on March 23 | | Dollar Index vs Gold Price | Dollar up 2%, Gold down 10% since US-Iran war began |

While the dollar's dominance may be temporary, market experts believe that gold is unlikely to lose its relevance as a strategic hedge against systemic risks, currency debasement, and geopolitical fragmentation. "The US dollar may be outperforming gold as a safe haven in the current environment of rising oil prices and geopolitical stress," said Sugandha Sachdeva, Founder of SS WealthStreet. "However, over the longer term, structural vulnerabilities in the dollar-based system could revive gold's appeal, reinforcing its role as a timeless store of value in an increasingly fragmented global financial order."

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