Does War Make Gold Go Up? Why Gold Is Stuck Near USD 4,200

Does War Make Gold Go Up? Why Gold Is Stuck Near USD 4,200

By Fazil Thaha, Faz Gold

Does war make gold go up? Not always, and October 2026 shows why. Fighting in the Middle East and the closed Strait of Hormuz have pushed oil above USD 100 a barrel, yet spot gold ended Monday, 12 October at around USD 4,168.90 per troy ounce, down 0.59% on the day, according to Kitco, after briefly trading above USD 4,200 in Asian hours.

Below I explain in plain words what is holding gold back, what is still supporting it, and what it means for buyers and sellers in Singapore.

What happened in the last few days

Over the weekend of 10 and 11 October, Yemen's Houthis claimed a strike on Riyadh's international airport, according to a market report from HDFC Sky, which also reported a ship damaged by a projectile while passing through the Strait of Hormuz. The Strait of Hormuz is the narrow sea lane between Iran and Oman that a large share of the world's oil passes through. On Monday, Iran's security chief Mohsen Rezaei said the latest US response to Tehran's conditions for reopening the waterway was not enough, Kitco reported.

Oil reacted quickly. Brent crude, the main global oil benchmark, settled up 1.8% at USD 106.65 a barrel on 12 October, according to Kitco.

Gold had a good Friday. On 9 October it rose about 1.5% to around USD 4,194.50 per troy ounce in late US trading, Kitco said. On Monday it pushed briefly above USD 4,200 and then slipped back. CNBC quoted spot gold at USD 4,164.85 per troy ounce at 9am New York time on 12 October, slightly below the same time on Friday. Silver was around USD 60.12 per troy ounce after Monday's close, according to Kitco.

Why is gold not going up more during a war?

Many people think of gold as a "safe haven", meaning something people buy when they are worried. That is true, but war also sets off other chain reactions, and some of them are bad for gold. Here is the chain as I see it today:

  1. War pushes oil up.
  2. Higher oil pushes inflation worries up. Inflation simply means prices of everyday things rising. In the University of Michigan survey released on 9 October, Americans expected prices to rise 4.7% over the next year, up from 4.6%, Kitco reported.
  3. Inflation worries push interest rates up. The US Federal Reserve (the Fed, America's central bank) raised its rate by 0.25 percentage points in September to a range of 3.75% to 4.00%, according to Invesco as reported by Kitco. Traders now see about an 87.7% chance of at least one more rise by December, according to Kitco.
  4. Higher rates make gold less attractive to some investors. Gold does not pay interest. When a 10 year US government bond pays around 5.24% a year, as it did at Friday's close according to Kitco, some big investors would rather hold the bond.
  5. A strong US dollar weighs on gold too. Gold is priced in US dollars. The US dollar index, which measures the dollar against other major currencies, was around 102.2 on Monday, near an 18 month high, Kitco said. A stronger dollar makes gold more expensive for buyers using other currencies.

So the war is pulling gold in two directions at once. Fear supports it, but the oil, inflation, interest rate and dollar effects hold it back. That tug of war is a big reason gold has been moving sideways around USD 4,100 to USD 4,200 rather than shooting higher. If you read my earlier article on why gold is not going up, this is the same tug of war, now with oil adding fuel.

What is still holding gold up

Gold has not collapsed either, and the reasons matter for long term holders.

Record money into gold funds

A gold ETF (exchange traded fund) is a fund that holds physical gold and trades on the stock market like a share. The World Gold Council reported on 7 October that gold ETFs worldwide took in about USD 10 billion in September and a record USD 31 billion in the third quarter. Total holdings reached a record 4,256 tonnes. Kitco reported that the World Gold Council saw inflows in Asia for a third month in a row, with Singapore among the markets that recorded inflows.

Many investors are buying gold even with interest rates above 5%. The World Gold Council linked this to worries about inflation, high energy prices, stretched share prices and swings in the bond market.

Central banks

Invesco, quoted by Kitco on 12 October, said the old link between gold and interest rates has weakened a lot since 2022, mainly because central banks keep buying gold whatever the price. I covered this in more detail in our article on central banks buying gold. Invesco also noted gold ended September at USD 4,157 per troy ounce, up 3.7% over the third quarter, despite a sharp bond selloff.

What to watch this week

The next big number is the US Consumer Price Index (CPI) for September, due on Wednesday, 14 October. CPI is the main measure of US inflation. A high reading could raise the chance of another Fed rate rise, which could weigh on gold. A softer reading could do the opposite.

What this means for Singapore buyers

For customers at our counter, a few practical points:

  • Prices can move fast on headlines. On Monday gold moved from above USD 4,200 to below USD 4,170 per troy ounce within one day. If you are buying, check the live SGD prices on our gold bars page or silver bars page before you come in, as our prices follow the market through the day.
  • Waiting for a price? Instead of watching the screen all day, set a free gold price alert. You pick a product and a target price, and we email you once when our live price reaches it.
  • Thinking of selling? Our sell gold calculator shows our live buyback price (the price we pay you when you sell to us) for each bar before you travel. You can also see the full list on our buyback rates page.
  • Buying a little at a time? When the news is noisy, some people prefer to put a fixed amount into gold every month instead of trying to time one big purchase. The Monthly Savings Plan tab in our free gold calculator shows how that has worked in the past, using historical prices. Past results do not guarantee future results.

Keep your receipts and original packaging, as this helps when you sell.

The bottom line

War does not automatically push gold up. Right now the Middle East conflict is supporting gold through fear, but it is also pushing oil, inflation worries, interest rates and the US dollar higher, and those hold gold back. Strong buying by gold funds and central banks has kept gold from falling far. This week's US inflation figure is the next test.

Visit Faz Gold

Our counter is at 10 Jalan Besar, #B1-19/20, Sim Lim Tower, Singapore 208787, open daily from 10.30am to 8pm. For questions or live prices, WhatsApp us at +65 9767 7774. You can also try our free tools: the Gold and Silver Calculators, the Gold Rate Alert and the Sell Calculator.

Sources

This article is for general information and market commentary only and is not financial or investment advice.

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