Spot gold prices plunged again late at night, falling more than 3% at one point! Why is the gold price "fluctuating up and down"?

Ask AI · How Do Geopolitical Tensions Affect Short-Term Gold Price Fluctuations?

Gold prices have been “jumping all over the place.”

After a continued rebound on Tuesday and Wednesday, on Thursday the London spot gold price once again fell below $4,500 and kept sliding, at one point dropping to $4,350.52 per ounce, down more than 3%.

Wind data shows that as of the close on March 26, spot gold fell 2.79% to $4,379.68 per ounce; COMEX gold futures fell 3.85% to $4,376.90 per ounce.

In the early trading session of March 27 in Asia, the gold price rose again. As of the time of publication, spot gold was up 0.53% to $4,405.07 per ounce; COMEX gold futures were up 0.43% to $4,395.2 per ounce.

In terms of news, according to Xinhua News Agency, on March 26 U.S. President Trump posted on social media, saying that the airstrike on Iranian energy facilities had been delayed by another 10 days, to 8:00 p.m. Eastern Time on April 6.

Gold Prices “Jump Around”

After experiencing a two-day rebound, gold prices have returned to a downward channel again, with the year-to-date gain for London spot gold now only around 2%.

“Recently, the precious metals market has once again been repeatedly battling around geopolitical developments, and slipping under pressure.” Bai Sunan, manager of the Precious Metals and New Energy Research Center at Guomao Futures, analyzed for reporters with The Paper, saying that on the one hand, the market is worried that the U.S. may quickly escalate military action against Iran again; oil prices staying elevated has kept the main trading theme once again revolving around “inflation expectations versus monetary policy” battles. At present, the market has increased its bets on the Federal Reserve’s rate hikes within the year; the U.S. dollar index has moved higher again, and precious metal prices have come under renewed pressure. On the other hand, the rebound and repair in precious metal prices over the past two days have also reached a stage of pressure levels. Because precious metals prices still lack clear upward drivers in the short term, under the back-and-forth games between bulls and bears, the bears have once again gained the upper hand, thereby suppressing prices.

The viewpoint from the Chief Investment Officer (CIO) office at UBS Wealth Management says that gold at this stage faces multiple obstacles, including energy-driven inflation and rate-hike expectations, a stronger dollar, and investment fund outflows.

UBS CIO said that, for many investors, the intuition is that gold is a “safe haven” amid geopolitical tensions, but the current price performance and volatile market conditions are not so. In fact, from a historical perspective, when geopolitical conflicts occur, gold does not necessarily always rise, especially in the initial period. Each geopolitical event has its own unique macroeconomic backdrop, with different situations in inflation, policy expectations, and capital flows. Therefore, making direct comparisons across different periods is challenging.

John Reade, a market strategist at the World Gold Council, said that because of this conflict, there has been “massive profit-taking, risk reduction, and deleveraging” in the market.

He added that because speculative investors gradually dominated the space last year, rather than other traditional demand drivers such as the jewelry industry, the gold price has become more volatile, and this situation is likely to continue.

“Due to the extreme volatility over the past few weeks, gold’s role as a portfolio diversification tool and a risk-mitigation instrument has been weakened to some extent,” Reade said.

Vanda, a data research institution, estimates that since the outbreak of the war, global gold ETFs have already faced roughly $10.8 billion in capital outflows.

Jason Turner of German private bank Berenberg said that data from hedge funds and brokers indicates that financial institutions have been “liquidating profitable gold positions” to meet margin calls in response to additional margin requirements from equity and bond markets.

Not only that—some central banks have already started considering selling part of their gold reserves to raise funds. Data shows that in the week ending March 20, Turkey’s central bank gold reserves fell from 820.8 tons to 771.8 tons. Banking insiders said Turkey’s central bank gold reserves recorded the largest single-week drop since August 2018, with about 22 tons of gold sold last week.

Gold Still Has Long-Term Investment Value

In recent days, the gold price has retreated about 21% from its historical high of $5,594 per ounce, and volatility has intensified under the combined impact of geopolitical risk and changes in rate expectations. However, market views still believe that gold has long-term investment value.

Alejandro Bondavalli, senior investment manager at Pictet Wealth Management in Switzerland, said that after posting a record 65% return in 2025, the gold price fell nearly 11% in the week in late March 2026, and this decline exceeded any single-week drop during the 2008 global financial crisis and the period when the internet bubble burst. The last time a similar single-week decline occurred was in 1983, when the Federal Reserve launched an aggressive rate-hike cycle to rein in inflation.

Bondavalli believes that gold’s long-term investment value remains solid. Uncertainty in policy and geopolitics has not diminished; “de-dollarization” is still a strategic goal for central banks and investors worldwide. Gold still has investment value for investors.

“I think the recent pullback is an opportunity to adjust strategic asset allocation. Once current unfavorable factors fade, there will be an opportunity to strategically position for a rebound in the gold price,” Bondavalli said.

UBS CIO believes that rather than viewing this round of decline as gold losing value, it is better described as a pullback along gold’s long-term upward trajectory. For portfolios, gold continues to play an important role in hedging and diversification. Although the gold price may still fall, based on the institution’s expectation that prices will eventually recover, these levels remain attractive to long-term investors. UBS CIO expects that gold’s target price at the start of 2027 will be $5,900 per ounce.

SentimenTrader analyst noted that market sentiment has entered the “extreme pessimism” range, and historical experience shows that this is often a precursor to a rebound. The data shows that when more than 80% of traders in GLD-related markets maintain bearish sentiment for two consecutive weeks, the probability of a gold rebound in the next 12 months is as high as about 89%, with a median return of more than 10%.

SentimenTrader believes that in the current context, gold has the configuration value of “high probability and asymmetric returns.” Especially as long as gold still holds above the 200-day moving average, the appeal of taking long positions over the next 3 to 12 months is rising.