Whoever is on the these days Gold price looks, experiences an unfamiliar picture. Instead of starting out as a classic crisis winner, the metal came under significant pressure around March 19, 2026.

Why gold is no protection against inflation despite the crisis

On Thursday, the spot price temporarily fell to $4,764 per troy ounce, its lowest level since February 6th. This is remarkable because the war with Iran was escalating at the same time, oil jumped above $110 a barrel and the markets avoided fears of a new surge in inflation – and gold is generally considered the perfect hedge against inflation.

Factor 1: Strong US dollar weighs on gold price

The obvious explanation for the decline in gold prices is: the strong US dollar. In fact, this is a central part of the story, but not the whole thing. The greenback has become the preferred safe haven in this crisis, even though The US dollar was recently threatened with decline.

Reuters reported on March 18 that the dollar index had risen by 2.5 percent since the escalation began. For buyers outside the dollar area, gold immediately becomes more expensive. At the same time, in acute crisis phases, the US dollar displaces part of the demand that would otherwise have reflexively flowed into gold.

Factor 2: Interest rates and monetary policy are depressing gold

There is also a second, possibly even more important, negative factor: monetary policy. Gold does not provide any ongoing income. That’s why it suffers particularly when the market suddenly expects interest rates to be high for a longer period of time. This is exactly what happened the week of March 19th.

The The US Federal Reserve left the key interest rate unchanged on March 18thbut still only signaled an interest rate cut for 2026. At the same time, it raised its inflation forecasts: for 2026, the Fed now expects 2.7 percent PCE inflation instead of 2.4 percent in December, and core inflation also 2.7 instead of 2.5 percent. This meant that the opportunity cost logic against gold rose again.

The actual mechanism is paradoxical: The War drives up the price of oil – and that’s exactly what’s slowing down gold. Rising energy prices are fueling concerns that inflation will become more stubborn again. This in turn makes interest rate cuts less likely and keeps returns high.

Reuters reported on March 18 a surprisingly strong increase in US producer prices in February of 0.7 percent compared to the previous month; over the year they were 3.4 percent higher. Market participants interpreted this as a signal that inflation pressure was already unpleasant before the recent escalation of the war – and could now become even tougher due to the oil price shock.

Factor 3: Profit taking after record run

This is a problem for gold in the short term, although in the long term it often benefits from fears of inflation. There is also a third point that is often underestimated in hectic market phases: profit-taking. Gold had already been on an extraordinary run before the latest escalation, rising above $5,000 for the first time at the end of January.

In early March, Reuters quoted traders and analysts as saying that many market participants had become more cautious after the extreme fluctuations in late January. After heavy advance purchases in the run-up to the war, a classic “buy the rumour, sell the fact” effect set in: those who had opted for crisis mode early on took advantage of the escalation not for subsequent purchases, but for cashing in.

The positioning also suggests that gold remains structurally sought after, but was tactically overextended. The World Gold Council reported inflows into gold-backed ETFs for the ninth consecutive month in February; In February alone, a net inflow of US$ 5.3 billion was received worldwide, and stocks rose to a record level of 4,171 tons.

At the same time, however, COMEX net long positions fell 21 percent to 504 tons in February. This suggests a split picture: strategic demand remains intact, but short-term speculators reduce risk.

Factor 4: Liquidity pressure on the markets

In falling stock markets, a fourth stress factor comes into play: the need for liquidity. When stock prices slide and margin calls threaten, investors often sell not their weakest positions, but their most liquid and profitable positions. Reuters pointed out exactly this mechanism at the beginning of March.

The decline in the stock markets therefore increased the pressure on gold because some investors realized profits from the precious metal in order to finance losses or collateral elsewhere. In such moments, gold is not sold as protection because it is fundamentally unattractive, but because it sells well.

After all, in this crisis, gold is not only competing with the US dollar, but also with a very direct inflation hedge: the Energy sector itself. Reuters reported on March 18th of strong inflows into energy funds. In March alone, 2.1 billion US dollars flowed into the sector globally, while the MSCI World Energy Index increased by 29.5 percent over the course of the year.

For some investors, this is a more immediate bet on the consequences of war than gold: those who expect rising oil and gas prices would rather buy producers and refineries than a metal with no ongoing income.

Gold prices are falling not just because of the US dollar – several factors are crucial

The conclusion is therefore: No, it is not just the strong US dollar. The U.S. dollar is the most visible trigger, but gold’s decline in the days surrounding March 19, 2026 is the result of multiple forces at once – and the long-term outlook remains positive as long as investors are patient.

“In the longer term, I remain positive about gold and then the mark of 6,000 US dollars per ounce is again a conceivable goal. However, I consider a return to the long-term price level between 2,000 and 3,500 US dollars to be almost impossible,” says Wolfgang Wrzesniok-Roßbach, who has been working in the precious metals industry for over 30 years and will be attending the independent industry conference next week.Future Forum Precious Metals“, organized in Frankfurt.

“If the Iran war doesn’t get significantly worse, I initially expect a sideways movement with continued high volatility in the price.” Wrzesniok-Roßbach

In the short term, however, prices of 4,500 US dollars are more realistic than a quick increase to 6,000 US dollars per ounce.