Why gold costs will not be hovering? | EUROtoday

A well known inventory market proverb says: “Buy when the cannons are firing.” In different phrases, in instances of battle and uncertainty, folks ought to make investments.

Those trying to shield their wealth and property usually flip to gold — despite the fact that gold is never low-cost in turbulent instances. In instances of crises, similar to a pandemic or a battle, demand for gold usually rises. This stronger demand tends to push costs increased, because it did within the first weeks of this yr.

If costs proceed to rise, investments in gold not solely protect wealth but additionally probably improve it. So is the present setting a boon for speculators?

Gold is mostly much less of a speculative funding and extra of a safe-haven asset. This has been mirrored within the gold worth’s current growth, which has repeatedly reached new highs — mirroring the tense international political state of affairs. According to the comparability portal Gold.de, the valuable metallic reached its all-time excessive on January 28, 2026, at $5,417.60 (€4,721.40) per ounce.

However, throughout the Iran battle, the worth has not continued to rise regardless of elevated market uncertainty. One week after the battle started on February 28, gold briefly traded at $5,327.42, however has since stabilized inside a variety of $5,000-$5,200 per ounce.

For Michael Hsueh, head of the Metals Research division at Deutsche Bank, this doesn’t come as a shock. Although gold costs are usually increased on common after a disaster occasion, there are “greater differences between individual cases than the average might suggest.” He advised DW that Deutsche Bank noticed an identical sample final yr following Israel’s assaults on Iran.

Gold will not be getting dearer

Carsten Fritsch, a commodities analyst at Commerzbank, has seen similarities with the present battle: “The gold price has not benefited from the uncertainty caused by the Iran war,” he advised DW. “On the contrary, it is actually trading lower than before the war began.”

He says there are two components at play right here. First, gold is traded in US {dollars}. When the greenback strengthens, gold turns into dearer for patrons utilizing different currencies. As a consequence, demand from these patrons declines, which tends to push the worth down.

Second, rising oil costs are driving up inflation. When inflation will increase, it turns into much less seemingly that the US Federal Reserve will reduce rates of interest. If buyers count on rates of interest to remain increased, gold turns into much less engaging as a result of it doesn’t pay curiosity, whereas different investments do.

An overheated gold market

Wolfgang Wrzesniok-Roßbach, managing director of Fragold GmbH and an advisor to personal and institutional buyers, will not be stunned by the present sideways motion within the gold worth. In his view, it displays a cooling of the market.

“The rise in the gold price and the prices of other precious metals in the last quarter and in January was disconnected from the actual fundamental data and had therefore become completely exaggerated.”

In his evaluation, the sharp improve in costs had actual penalties for demand. For instance, he stated that jewellery demand—an necessary issue within the gold market—fell within the fourth quarter of final yr to its lowest degree prior to now 15 years.

Central banks, he stated, had been additionally cautious due to the excessive worth. Although they nonetheless purchased 230 tons of gold, this was the second-weakest fourth-quarter demand from central banks prior to now 5 years.

He attributes the bull run within the gold market primarily to price-driving forces, notably the purchases by buyers and speculators who had beforehand wager on falling costs. To restrict their losses, they now had to purchase gold at increased worth ranges, he defined.

“The sharp decline on January 30 and afterward clearly revealed how exaggerated the previous surge had been.”

Carsten Fritsch shares this view. “The price increase in January was an exaggeration and could no longer be explained by the usual influencing factors. Greed and the fear of missing out on the price rally also played an important role.”

All that glitters will not be gold

Gold will not be the one commodity presently experiencing a growth. Silver can also be in robust demand and due to this fact costly. However, Wrzesniok-Roßbach doesn’t see a worth bubble on this treasured metallic.

“As far as the silver price is concerned, I actually see it as fundamentally very well supported, and in my opinion we will have to get used to a permanently high price level and thus a complete revaluation.”

Frank Schallenberger, a commodities skilled at Landesbank Baden-Württemberg (LBBW), disagrees. In his view, demand for silver is more likely to weaken. “In the coming months, the slowing momentum in the solar industry, the weak global economy, and a further decline in jewelry demand are likely to weigh on the silver price.”

What’s subsequent for silver?

Asked for a forecast, he painted a extra nuanced image of the silver market.

“It is uncertain whether the silver market will show a supply deficit for the sixth consecutive year in 2026. If sales of silver ETCs [Exchange Traded Commodities – the ed.] continue over the course of the year, the market balance could actually shift into a supply surplus,” he stated.

In distinction, Wolfgang Wrzesniok-Roßbach believes silver costs are more likely to preserve climbing. He factors to the worldwide push towards electrification — significantly the enlargement of solar energy — as the important thing driver. Because of this development, he says he wouldn’t be stunned if silver finally stabilizes at ranges above $100 per ounce.

The outlook for gold

When it involves gold, Frank Schallenberger urges warning. Weak jewellery demand and central banks’ hesitancy to extend their gold holdings may sluggish the current worth rally within the months forward, he famous. “At the same time, US policy remains an important source of uncertainty, as it may continue to trigger unexpected reactions in financial markets.”

Still, he notes that gold is more likely to stay engaging to buyers as a safe-haven asset.

Carsten Fritsch of Commerzbank takes a extra forward-looking view. If the battle had been to finish, he expects the greenback and oil costs to say no, which might usually assist increased costs for each gold and silver.

However, whether or not costs would truly rise once more would largely “depend on how strongly higher oil prices feed into inflation — and how central banks choose to respond,” he stated.

This piece was initially printed in German.