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For thousands of years, gold has had a simple reputation. When the world feels unstable, gold feels safe.
One of the strongest examples was in 1979-1980. The iranian The revolution, the US embassy hostage crisis in Tehran and the Soviet invasion of Afghanistan sent shockwaves through global markets.
Investors rushed to protect their wealth and gold delivered. Prices jumped from approximately $250 per ounce in early 1979 to almost $850 in January 1980, an impressive 240% increase in about a year.
That rally cemented gold’s identity as the ultimate crisis hedge.
Fast forward to 2026, and once again we’re seeing tensions flare around Iran. But this time, gold’s reaction seems different.
Related: Gold is winning the fear trade as it bleeds cryptos
When US President Donald Trump announced military action on February 28, gold initially behaved exactly as expected. Prices went up to $5,274.64, and on March 2, gold touched $5,414 per ounce.
The move followed military strikes that killed Iran’s Supreme Leader Ayatollah Khamenei, sparking reprisals and fears of disruptions in the Strait of Hormuz, one of the world’s most critical oil choke points.
But the concentration did not last.
As of March 3, gold was down 2.1% over the past 24 hours, up roughly $106, to trade near $5,190.66 an ounce.
Analysts suggest that inflation expectations may be tempering the upswing. Commerzbank’s Thu Lan Nguyen said The Wall Street Journal that markets are now more focused on inflationary risks linked to the war, reducing expectations of interest rate cuts. A stronger US dollar may also be weighing on gold.
Meanwhile, Bank of America last week set $6,000 an ounce as its new price target for gold and predicted would be achieved in the next 12 months.
Historically, gold has been seen as a hedge against inflation because it cannot be easily printed or expanded like fiat currency. When inflation rises, investors tend to buy gold to preserve purchasing power.
Bitcoin (BTC) works on a similar principle but in digital form. Its supply is limited to 21 million coins, making it mathematically scarce. Supporters argue that this fixed supply protects against currency degradation and is therefore often referred to as “digital gold”.
But unlike gold, Bitcoin behaves more like a risk asset during crises, meaning its hedging narrative remains debated among traditional investors.
