Gold in a war without a script

By Robson Mandiwanzira

When the United States and Israel struck Iran, markets initially behaved exactly as expected.

Oil surged, equities wobbled, and gold rallied as investors scrambled for safety.

In the first phase of the conflict, gold surged to unprecedented levels of around US$5,200 per ounce, reflecting a classic geopolitical risk premium. The move was swift, headline-driven, and entirely consistent with historical patterns of crisis pricing.

But within weeks, that familiar script began to unravel.

Through March, even as the conflict intensified, gold corrected sharply, falling by roughly 8–12% from its peak before stabilising.

As of 1 April, it has begun to recover part of those losses, supported by a softer dollar and renewed uncertainty over the trajectory of the war. It now trades in a tentative recovery range, reflecting a market no longer moving in a straight line.

These are not normal fluctuations. They are signals of a deeper shift in how global risk is being priced.

From safe haven to contested hedge

For decades, gold followed a simple logic: geopolitical instability drove prices higher. That relationship still exists but it is no longer dominant.

Gold is now being pulled in multiple directions at once.

On one side is war risk. Escalation in the Middle East, particularly around the Strait of Hormuz, continues to generate strong demand for gold as a store of value.

The initial surge toward record territory reflected that instinct in its purest form: protection against disorder.

But almost immediately, a second force took control.

As oil prices surged toward, and at times above, the US$100 per barrel mark, inflation expectations climbed sharply. Markets began scaling back expectations of U.S. rate cuts, while real yields moved higher. Gold, an asset that offers no yield, came under pressure.

The paradox is now clear: the same war that drives gold higher in the short term suppresses it in the medium term through inflation dynamics and tighter monetary expectations.

Liquidity is now driving the market

This dynamic was amplified by liquidity stress.

Gold did not fall because risk disappeared. It fell because investors needed cash.

In highly leveraged markets, gold remains one of the most liquid assets available. As equities weakened and volatility surged, investors sold gold positions to cover losses elsewhere. The correction, therefore, was not a rejection of gold’s safe-haven role, but a reflection of its function inside a stressed financial system.

Gold is no longer insulated from turbulence. It is part of the mechanism through which stress is transmitted.

A fragmented safe-haven system

At the same time, another long-standing relationship has begun to fracture.

Earlier in the conflict, dollar strength reinforced gold’s weakness. But as April begins, signs of softer dollar conditions and shifting global growth expectations are helping gold recover.

The traditional inverse relationship between gold and the dollar is no longer stable. Both are now operating within a fragmented safe-haven system—sometimes competing, sometimes reinforcing each other, often moving unpredictably.

The result is a market where no single asset consistently holds the “risk-free” narrative.

Markets are pricing duration, not just danger

What markets are now pricing is no longer just the severity of the Iran conflict, but its duration.

On one hand, warnings of deeper energy supply disruptions point to a prolonged inflation shock. On the other, intermittent signals of de-escalation or contained escalation have triggered waves of relief across global markets.

This is why April marks the beginning of a new phase: stabilisation and repricing.

Gold is no longer reacting purely to headlines of war. It is responding to shifting expectations around inflation, interest rates, currency movements, and the likely lifespan of the conflict.

It rises when escalation dominates. It softens when tighter policy expectations take hold. It recovers when growth fears or dollar weakness re-emerge.

This is not inconsistency. It is the market simultaneously pricing competing futures in real time.

The producer’s paradox: Zimbabwe’s reality

Nowhere is this tension more visible than in gold-producing economies such as Zimbabwe.

At first glance, higher gold prices should deliver a windfall boosting export earnings and improving foreign currency inflows. April’s stabilisation offers some relief on that front.

But the more decisive variable remains oil.

Elevated energy prices continue to push up fuel costs, raise transport and production expenses, and feed inflation across the domestic economy.

The result is not a clean gain, but a tightening squeeze: gold revenues rise, but so do the costs of producing and sustaining economic activity.

If gold stabilises rather than continues rising, while oil remains elevated, the net benefit narrows further. In this environment, gold becomes less a driver of growth and more a buffer against shock.

For Zimbabwe, the key question is no longer whether gold rises during war, but whether it rises enough—and for long enough to offset a sustained energy shock.

From commodity to strategic asset

Beneath the volatility lies a deeper structural shift.

The Iran conflict is reinforcing a broader fragmentation of the global financial system. Energy is increasingly weaponised, sanctions risk remains elevated, and confidence in neutral financial infrastructure is weakening.

In such an environment, gold is evolving beyond its traditional role.

It is no longer just a commodity, or even a hedge. It is increasingly functioning as a strategic asset, a politically neutral store of value outside the reach of sanctions regimes and sovereign control.

For gold-producing nations, this shift presents opportunity. But only under strict conditions.

Without policy discipline, efficient production systems, and tight control over leakages, high gold prices do not automatically translate into sustained national wealth.

Not a refuge, but a repricing

Gold is not failing in this war. It is being redefined by it.

If March was defined by liquidation and inflation shock, April is shaping up as a period of recalibration.

Gold is stabilising but it is not settling.

Its next move will depend less on whether conflict persists, and more on which economic consequence dominates next: inflation, interest rates, currency shifts, or growth fears.

In a war without a script, gold no longer rises simply because fear rises.

It moves according to which version of the crisis markets believe will matter most.

For producers like Zimbabwe, that makes gold something more complex than a blessing. It becomes a test of policy discipline, of economic resilience, and of whether resource wealth can be transformed into real power in a world where even safe havens are no longer safe.