Gold is the ultimate hedge against global chaos. Or at least, that’s what it has been historically. But during this Middle East crisis, it has been anything BUT rock-solid. The question is…why?
Check out the MoneyShow Chart of the Day, a weekly chart of the SPDR Gold Shares (GLD) going back a half decade. You can see the incredibly powerful bull market of the last few years…how wildly overbought GLD got several weeks ago…and how the ETF has pulled back dramatically from its late-January high.
Gold: Why ISN’T it Thriving Here?
Source: StockCharts
Moreover, that decline accelerated after hostilities broke out in late February. Gold plunged 15% – losing value for a nine-day stretch at one point – after the bombs started falling in the Middle East.
So, what’s gotten into gold? Here are my three answers...
1. The Technical Blow Off. Gold rose incredibly far, incredibly fast in late 2025. Then it experienced a wild, exuberant blow-off top in January. I don’t care what asset you’re talking about. When you get that powerful a move, with that powerful a technical blow off, you’re going to get some ugly action afterward. Not to mention a lengthy period of consolidation.
2. The Radical Rate Reversal. It wasn’t that long ago we were talking about more Federal Reserve rate CUTS in 2026. Now, markets are starting to price in potential rate HIKES. And this isn’t a US-only thing. It’s happening in several global markets, too.
Long-term yields have surged as well. Investors are worried that higher energy prices will fuel more inflation – while spiraling war-related costs will necessitate more government bond issuance. Since gold yields nothing, higher yields on other assets can increase competition for funds. That puts downward pressure on gold.
3. The Scramble for Cash. Look at ALL markets in March. Stocks have been selling off. Bonds have been selling off. Gold has been selling off. That smacks of derisking and deleveraging. Or in simple terms, a scramble to raise cash. Some central banks (like Turkey) are also reportedly considering liquidating gold holdings to bolster their cash reserves.
If you’re asking why your primary safe-haven asset isn’t keeping you safe from losses, those are my three answers.
But I ALSO believe the long-term bull market remains intact. The forces that helped push gold to $3,000, then $4,000, then (briefly) $5,000 still look to be in place. So, my advice is simple. Maybe don’t be in such a hurry to get rid of your gold.
