US-Israel-Iran conflict: Why is gold falling?

On February 28, 2026, the joint military action by the United States and Israel against Iran triggered intense fluctuations in the international oil, US dollar, and gold markets. Generally, wars and geopolitical conflicts tend to sharply increase market risk aversion, pushing up gold prices. However, strangely, since the US-Israel-Iran military conflict on February 28, gold prices have fallen while oil and the US dollar have risen.

Even more surprisingly, the conflict marked a turning point, with both gold and the dollar reversing their previous trends. From February 27 to March 16, 2026, the London Gold Spot Price and COMEX gold futures settlement prices (active contracts) decreased by 4.36% and 4.68%, respectively, while the US dollar index rose by 2.21%. In contrast, from the beginning of the year until the outbreak of the US-Israel-Iran conflict (December 30, 2025 – February 27, 2026), London Gold Spot and COMEX gold futures prices increased by 19.56% and 19.64%, respectively, while the dollar index fell by 0.58%. Both international gold prices and the dollar index experienced reversals before and after the war. What caused safe-haven assets like gold to decline during wartime? Has the petrodollar made a comeback? How does the petrodollar influence gold trends?

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