For thousands of years, gold has had a simple reputation. When the world feels unstable, gold feels safe.
One of the clearest examples occurred in 1979-1980. The Iranian Revolution, the US embassy hostage crisis in Tehran and the Soviet invasion of Afghanistan sent shockwaves through world markets.
Investors rushed to protect their wealth and gold delivered. Prices jumped from about $250 per ounce in early 1979 to nearly $850 in January 1980, a staggering 240% increase in about a year.
That rally cemented gold’s identity as the ultimate hedge against the crisis.
Fast forward to 2026, and once again we are seeing tensions around Iran rise. But this time, gold’s reaction seems different.
Related: Gold Is Winning the Fear Trade as Cryptocurrencies Bleed
When US President Donald Trump announced military action on February 28, gold initially performed exactly as expected. Prices rose to $5,274.64, and on March 2, gold reached $5,414 per ounce.
The move followed military strikes that killed Iran’s Supreme Leader Ayatollah Khamenei, sparking retaliation and fears of disruption in the Strait of Hormuz, one of the world’s most critical oil chokepoints.
But the demonstration did not last.
As of March 3, gold was down 2.1% in the last 24 hours, approximately $106 lower, trading near $5,190.66 an ounce.
Analysts suggest inflation expectations may be moderating the rally. Commerzbank’s Thu Lan Nguyen told The Wall Street Journal that markets are now focusing more on war-linked inflation risks, reducing expectations for interest rate cuts. A stronger US dollar may also be weighing on gold.
Meanwhile, last week, Bank of America set $6,000 per ounce as its new gold price target and predicted it would be reached within the next 12 months.
Historically, gold has been seen as a hedge against inflation because it cannot be printed or enlarged as easily as fiat currency. When inflation rises, investors often buy gold to preserve purchasing power.
Bitcoin (BTC) operates on a similar principle but in digital form. Its supply is capped at 21 million coins, making it mathematically scarce. Supporters argue that this fixed supply protects against currency devaluation and is why it is often called “digital gold.”
But unlike gold, Bitcoin behaves more like a risk asset during crises, meaning its hedging narrative remains the subject of debate among traditional investors.