The old rule says war is good for gold. Frightened investors buy it for protection. That still happens, but it is only half the story.
The oil route
If a conflict threatens oil supplies, such as trouble in the Gulf or the Strait of Hormuz, oil prices rise. More expensive oil feeds inflation. Higher inflation keeps interest rates high. High rates hurt gold.
Two forces, one headline
- Fear pulls gold up.
- More expensive oil and higher rates pull gold down.
Which one wins depends on the moment. When inflation is already the main worry, the oil route can dominate, and gold can fall on frightening news. When inflation is calm, fear tends to win.
A peace deal can work the same way in reverse: less fear, but cheaper oil and possibly lower rates.