Gold Closes Lower Despite Iran Conflict Heating Up
Gold prices closed lower on Thursday (March 5, 2026) after a strengthening US dollar and rising bond yields overwhelmed the safe-haven impulse stemming from the escalating conflict in Iran. Spot gold fell 1.2% to $5,076.59 per ounce at the close of the main session, after briefly reaching an intraday peak of $5,194.59 before turning lower.
In the futures market, US gold futures also ended down 1.1% at $5,078.70 per ounce. Pressure came from a combination of a stronger dollar and rising yields, as gold—as a non-yielding asset—tends to be less attractive when bond yields rise.
Rising energy prices due to the war have also fueled inflation concerns, leading the market to believe the Fed's room for interest rate cuts could be narrower. The US dollar strengthened and Treasury yields rose, while the market also awaited further economic data (including the US employment report) to determine the direction of future interest rate policy.
From a macro perspective, the market again considered the risk of energy inflation a key factor. The oil surge due to the escalation of the Iran conflict increases the likelihood of price pressures spreading to transportation costs and supply chains, making expectations of a Fed interest rate cut more cautious. This is typically negative for gold because high interest rates increase the opportunity cost of holding non-yielding assets, while a stronger dollar makes gold more expensive for non-USD buyers.
However, from a geopolitical perspective, demand for safe havens hasn't disappeared—it's just been temporarily outpaced by the dollar and yields. As long as uncertainty surrounding the security of energy routes (especially Hormuz) and the risk of escalation remain high, gold still has the potential to be bid up when the market returns to risk-off mode. This means that gold's future movement will be heavily headline-driven: any sign of a easing conflict could depress gold's risk premium, but a new escalation or more severe energy supply disruptions could quickly revive buying momentum in the precious metal.
Source: Newsmaker.id
