Gold continues to decline—why is the "safe-haven asset" not acting as a "safe haven"?

Golden Ten Data reported on March 20 that, generally speaking, geopolitical conflicts tend to trigger heightened risk aversion in the market, pushing up gold prices. For example, after the outbreak of the Russia-Ukraine conflict in February 2022, gold prices surged within half a month. However, since the outbreak of the US-Israel-Iran conflict, oil and the US dollar have soared, while gold has experienced a continuous decline. "This counterintuitive trend in gold prices is mainly due to the significant suppression of the risk aversion logic by the interest rate logic," said Qu Rui, Senior Deputy Director of the Research and Development Department at Dongfang Jincheng. Currently, the prolonged conflict in the Middle East and the continuous rise in oil prices are boosting global inflation expectations, which may reinforce the Federal Reserve's stance of keeping interest rates unchanged, thereby putting pressure on precious metals. Qu Rui reminded that in the short term, the movement of gold prices still needs to focus on factors such as the Federal Reserve's rate cut window and the evolution of the Middle East situation, and to be alert to potential risks such as global inflation heating up beyond expectations and the expansion of geopolitical conflicts.