Even Gold in Turbulent Times Can Fall: This Round of Gold Price Fluctuations Serves as a Reminder for Ordinary People

A record and a rout

It has been reported that London spot gold hit about $5,596 per ounce on January 29, 2026 — a fresh record — and then, astonishingly, plunged more than 20% within two months. For an asset long cast as a safe haven, the swing looks perverse. Why did a metal that should rally when the Strait of Hormuz was reportedly sealed after the Feb. 28 U.S.–Israel strike on Iran instead reverse and cascade lower? The short answer: liquidity and narrative, not only geopolitics.

Liquidity, policy and fast-changing narratives

The initial shock did lift gold. On the first trading day after the conflict, spot prices briefly jumped from about $5,296 to $5,423. But as markets begged for cash to meet margin calls and global investors sold assets across equities, commodities and emerging-market currencies, gold — as one of the most liquid stores of value — became a source of liquidity rather than a refuge. It has been reported that by mid‑March prices fell to roughly $4,500 and hit about $4,100 on March 23 before rebounding toward $4,600. Compounding the sell-off was a rapid shift in inflation expectations: surging oil and a Fed that signaled it might stay hawkish tightened real yields and strengthened the dollar, raising the opportunity cost of holding non‑yielding bullion.

No cash flows, many stories — and a lesson for savers

Financially, gold is unusual: it produces no interest, no dividends, no rent — its valuation lacks a cash‑flow anchor. Historically analysts have used real U.S. interest rates as a proxy anchor; when that relationship broke down after 2022, traders filled the gap with competing stories — tariff arbitrage, a breakdown in trade rules, central‑bank buying, monetary easing, war and then inflation. Each narrative carried the market for a time. It has been reported that tariff moves and trade policy shocks in 2025 — including large U.S. tariffs that widened London–New York spreads — materially changed flows into and out of gold. The practical lesson for ordinary people? Consensus can be a fragile anchor. When narratives flip and liquidity is scarce, volatility can bite retail investors hard — especially those using leverage or chasing highs — a point reinforced by collective risk warnings from multiple banks in recent weeks.