For all the talk about gold being a hedge against geopolitical uncertainty, the yellow metal has not been shining since the Iran war started, falling over 12% in the past month to around $4,550 an ounce.
Of course, gold remains up 4% year-to-date and almost 50% in the past 12 months so long-term holders have little to complain about.
Still, the recent dip has a lot of financial advisory clients wondering whether the selloff is a sign that the rally in gold is losing its luster.
Alex Shahidi, co-CIO of Evoke Advisors, says the pullback may be a short‑term event driven by “uncertainty and a temporary rush to cash.” He points out that even after the pullback, gold remains one of the few major asset classes that is still up, which in his opinion is “telling.”
“We have seen gold decline alongside many other assets as investors sought liquidity under panic‑like conditions. Stepping back, this may be less about gold going down and more about confidence in paper money continuing to weaken amid ongoing geopolitical stress,” Shahidi said.
Shahidi notes that central bank demand has been a major driver as countries diversify reserves in response to rising debt, fiscal uncertainty and potential concerns about dollar weaponization. At the same time, investors are gradually recognizing that gold can serve as a strategic allocation, not just a hedge.
“Since 1971, gold’s long‑term returns have been competitive with global equities while also providing diversification benefits. As that understanding spreads and given gold’s finite supply, the longer‑term upside potential may become more compelling,” Shahidi said.
Elsewhere, Aakash Doshi, head of gold commodities fund strategy at State Street Investment Management, says none of the structural fundamental drivers of the gold price cycle have changed other than Fed policy expectations, which can evolve again while the committee is on hold. Record global debt, and a record government share of that debt, is likely to be exacerbated by the latest conflict in the Middle East, prompting concerns about global debasement, according to Doshi.
“Stock/bond correlations are still historically elevated and while gold has had a very challenging March, the 60/40 portfolio did not provide shelter, either,” Doshi said.
“Despite gold's 65% rally in 2025, global gold fund assets as a share of total global ETF and mutual fund assets ended the year below 1%! We think the enhanced strategic use case of gold as a portfolio diversifier, left-tail hedge, and alt-fiat asset is part of the next leg of the gold cycle. It is not an over-owned asset,” Doshi said.
Finally, Joe Cavatoni, senior market strategist, Americas, World Gold Council, believes the structural case for gold has not changed and the short‑term volatility is being driven by fast‑moving and often disruptive policy decisions.
“Those create noise, but not a shift in fundamentals. With elevated debt levels, long‑term currency debasement risks, and persistent geopolitical uncertainty, gold’s role as a strategic diversifier remains firmly intact. For long‑term investors, pullbacks like this are often opportunities to re‑engage, not reasons to step away,” Cavatoni said.
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