Iran conflict breaks traditional investment patterns as gold, bitcoin both in distress

In times of uncertainty, investors typically turn to so-called safe-haven assets—such as gold and stable currencies—valued for their ability to preserve wealth during market turmoil. But as the conflict in the Middle East continues to disrupt global markets, gold is defying expectations, heading toward its steepest weekly decline in decades. Meanwhile, newer assets like cryptocurrencies are also being shaken by persistent volatility.

After initially behaving in line with its safe-haven reputation at the onset of the crisis, gold has since reversed course. On March 20, prices recorded their largest weekly percentage drop in more than 14 years and are now on track for their sharpest weekly decline since 1983, as the Iran conflict continues to roil markets.

Bullion—physical gold in the form of bars or coins—fell 2.36 per cent to $4,494.10 per ounce, according to GoldPrice.org. The decline comes as the Middle East war drives energy prices higher and dampens expectations of near-term interest rate cuts.

Gold has now fallen for consecutive weeks since the US and Israel launched attacks on Iran on February 28. The downturn coincides with a strengthening US dollar and a broad sell-off in stocks and bonds, as investors grow increasingly concerned about the inflationary and economic impact of rising energy costs, according to reporting by The National.

Losses deepened following reports that the US plans to deploy three warships and thousands of Marines to the region. In response, traders have begun pricing in a 50 per cent chance of a US Federal Reserve rate hike by October, amid fears that inflation could remain elevated.

Earlier in the week, the US Federal Reserve, European Central Bank, Bank of England, and Bank of Japan all held interest rates steady, while signalling a willingness to tighten policy further if inflation persists.

Bitcoin–Gold Dynamic

Although Bitcoin has significantly outperformed gold over the long term, 2026 has seen periods where gold reached fresh highs, highlighting the shifting relationship between the two assets.

“The Bitcoin-gold correlation has flipped positive for the first time in weeks, suggesting the market is starting to treat Bitcoin less as a tech proxy and more as something else entirely,” Yevgeny Bebnev, a multi-manager fund specialist based in Dubai, told The National.

Bitcoin briefly fell below $70,000 in New York on March 20 as inflation fears linked to the Iran conflict unsettled markets, overshadowing a recent regulatory win for cryptocurrencies in the US, he added.

The cryptocurrency has now declined for three consecutive days after reaching a six-week high of nearly $76,000 on March 17, as volatility in energy and oil markets continues to weigh on investor sentiment.

Traders are currently pricing in a 50 per cent probability of a Federal Reserve rate increase by October, said Bebnev, founder and chief investment officer of Alaris Capital.

By Nazrin Sadigova