Since the start of the Iran War, the price of gold has fallen significantly. A data analysis shows how the assumption that gold protects against geopolitical risks is no longer statistically tenable.
• Since the start of the Iran War, the price of gold has fallen sharply
• The Geopolitical Risk Index (GPR) reached its strongest monthly increase of the 2020s in March 2026
• Hulbert Ratings has evaluated the correlation between gold and the GPR over rolling five-year periods since 1968
Gold price in war mode
When the USA and its allies attacked Iran at the end of February 2026, many investors waited for the expected signal: gold as a safe haven in the crisis. The opposite has happened. The price of gold has fallen by more than 21 percent since the start of the war. The price of gold is currently around $4,156 per troy ounce; At the beginning of the war, gold was still trading at over $5,200.
The fact that this price drop occurred during an escalating conflict is an obvious contradiction to common investor logic. In his analysis at MarketWatch, Mark Hulbert treats this contradiction not as a curiosity, but as an empirical finding with consequences.
The GPR Index: What the Data Shows Since 1968
The extent of geopolitical risk during this period was measurably high. The Geopolitical Risk Index (GPR), which Federal Reserve economists Dario Caldara and Matteo Iacoviello constructed based on articles from leading international daily newspapers, reached a value of 297 in March 2026, according to a LinkedIn post by financial analyst Dionysios Tsilioris. This corresponds to the strongest monthly increase in the 2020s, with an increase of 144 percent compared to the previous month. Another LinkedIn source gives the value 251.38 for another time in spring 2026; However, the two figures refer to different dates and are therefore not directly comparable.
Hulbert has now evaluated how the monthly gold price and the GPR correlate over rolling five-year periods since 1968. The result, published in his analysis at MarketWatch: The correlation coefficient fluctuated between -0.28 and +0.33 during this period. A negative value means that gold and GPR have inverse dynamics; a positive thing that they develop in parallel. This does not result in a statistically stable relationship that would serve as a reliable rule of action.
Hulbert concludes that the current behavior of the gold price is not a historical outlier, but fits seamlessly into the pattern of the past decades. Anyone who used a geopolitical escalation as a signal to buy gold as a market timer was historically just as often on the wrong side.
Gold, inflation, US dollars
Hulbert’s analysis is not limited to the GPR. He applied the same method to three other indicators that are regularly cited as gold drivers in investing practice: the US Consumer Price Index (CPI), the DXY dollar index and the Economic Policy Uncertainty Index, which measures political and economic uncertainty. The result is the same in all three cases, according to the MarketWatch report: The rolling five-year correlations are just as unstable over time as with the GPR. In doing so, Hulbert questions one of the most common narratives about gold: that the price reliably increases when inflation rises. In fact, the chart depicted in his analysis shows that while CPI and gold experience phases of co-movement, these phases are not permanent. Wes Crill, vice president and senior client solutions director at Dimensional Fund Advisors, puts it this way in a letter obtained by MarketWatch: “Investors should be wary of holding gold in hopes of protecting themselves against expected adverse events.”
Long-term value preservation vs. short-term crisis hedge
Hulbert himself admits a limitation in his analysis: his evaluation is based on rolling five-year periods. For significantly longer horizons, there is actually evidence of a protective function of gold. Campbell Harvey, a finance professor at Duke University, and Claude Erb, a former commodities and bonds manager at TCW Group, showed in their 2013 study “The Golden Dilemma,” published in the Financial Analysts Journal, that gold maintains its purchasing power over very long periods of time, a century or more. However, in the short and medium term, over years and even decades, this relationship with inflation is unstable, according to the study’s findings.
This is a relevant difference for investors who rely on gold as a tactical crisis protection instrument. Preserving purchasing power over generations is a different category than protecting against an acute drop in prices in the portfolio.
What investors can do with this insight
Hulbert derives a pragmatic conclusion from his analysis: If you want to hold gold in your portfolio, you should choose a small but fixed quota and maintain it regardless of external factors. According to historical data, adjusting the gold share in response to war reports, inflation data or currency movements is “most likely a wasted effort,” he writes at MarketWatch. This assessment should be understood as the author’s personal conclusion, not as a consensus position of the financial industry.
What the current decline shows under real market conditions: geopolitical escalation and gold price developments do not necessarily run in sync, even in one of the most intense conflicts in recent history. The Iran war didn’t reinvent this, it just made it particularly clear.
Paul Schütte, Bettina Schneider, editorial team at finanzen.net