After hitting record high prices early in 2026, gold suffered a surprise sharp dip when the Iran war broke out
The price of gold has been on the rise once more, reversing a months-long downward trend which saw the precious metal’s value fall by more than a quarter.
Investors have had a tough time predicting what markets will do this year, with uncertainty from the Iran war hitting inflation, currency markets remaining volatile and and growing concerns over the amounts the largest firms are spending on artificial intelligence.
In such times, previously investors might have turned to gold, seen as a safe haven in troubled times – but instead, the precious metal appeared to mirror some of those other markets with a steep decline in the first half of 2026.
Gold hit an all-time record price of more than $5,600 (£4,147) per ounce in late January. Through to mid-March it still traded at above $5,000 – but across the following five months it fell to a few dollars below $4,000, more than a 28 per cent drop from high point to low.
However, since the start of August it has started to rally once more, up 8 per cent over the past week alone to sit at $4,373.
“One of the stranger developments of recent days has been the pick-up in precious metals. After two months of outflows, gold ETFs attracted inflows in July, and the price of gold increased by more than 7 per cent last week,” said Jemma Slingo, investment expert at Fidelity International.
“It is tricky to pin down exactly what is driving the bounce, which follows a tough few months for gold. The metal did not behave like a traditional safe haven during the early stages of the Middle East conflict, but the changing outlook for interest rates could be moving the dial. If the last year is anything to go by, however, investors should be prepared for a bumpy ride.”
Interest rates potentially moving up in the US and beyond – analysts are split over the Bank of England’s likely movement – can decrease the likelihood of people buying gold, as it is easier to get a return from holding cash because gold pays no dividend.
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An uptick in gold purchasing, then, might be an indication that some investors believe no interest rate hike will be forthcoming.
Any breakthrough in peace talks between the US and Iran may also feed the gold rally further.
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