U.S. Dollar Gains 4% and Gold Drops 20% Since Feb. 28 Iran War
Updated
Updated · Real Economy Blog · Jun 11
U.S. Dollar Gains 4% and Gold Drops 20% Since Feb. 28 Iran War
1 articles · Updated · Real Economy Blog · Jun 11
Summary
Since hostilities began on Feb. 28, the U.S. dollar has appreciated about 4% while gold has fallen more than 20%, an unusual split for two assets often treated as havens.
Higher oil prices from the Iran war have lifted inflation and Treasury yields, reviving expectations of central-bank rate hikes that have turned into a headwind for gold.
The dollar’s strength has persisted despite pressure from U.S. fiscal strains, erratic trade policy and inflation, suggesting investors still favor it in global supply shocks.
Gold’s reversal follows a roughly 150% surge from 2022 to 2025, when geopolitical stress, softer U.S. inflation and central-bank buying had fueled its rally.
The move also undercuts de-dollarization efforts, especially in China, reinforcing the view that no viable reserve-currency alternative has yet displaced the dollar.
Why are central banks selling US bonds while investors flock to the dollar for safety amid the Iran crisis?
Has the Iran war permanently shattered gold's reputation as the ultimate safe haven asset?
Is the dollar's crisis rally a final show of strength before a new global financial order emerges?
Safe Havens Shaken: Gold’s Decline and Dollar Dominance After the 2026 Iran War
Overview
Following the killing of Iran’s Supreme Leader and renewed Israeli attacks in Lebanon, the Middle East plunged into rapid conflict escalation after February 28, 2026. Hezbollah’s swift involvement and Israel’s ground invasion triggered a dangerous regional expansion, leading to an immediate global market shock. Energy markets became highly vulnerable as crude prices surged, fueling inflation and putting immense pressure on economies, especially in Asia. Surprisingly, gold—usually a safe haven—declined sharply, as investors took profits after its strong 2025 run and shifted to the strengthening U.S. dollar and high-yielding Treasuries. This chain of events exposed deep market fragility and challenged traditional crisis responses.