Despite initial predictions by US President Donald Trump that the conflict with Iran would last less than four weeks, hostilities have now persisted for over three weeks with no end in sight. The turmoil in Middle East geopolitics has driven oil prices to multi-year highs. However, puzzlingly, traditional safe-haven assets such as gold and silver have entered a downward trend.

Last week, gold futures (GC00) plunged 9.6%, losing nearly $487 per ounce and marking their worst weekly performance in 14 years. On Monday, spot gold fell below $4,100 for the first time since November 24 of last year, breaching several key psychological levels. This movement contradicts historical patterns—during past geopolitical conflicts, capital typically flowed into gold for protection.

Jurrien Timmer, Director of Global Macro at Fidelity, expressed confusion: "Why are risk assets falling while US Treasury yields and Bitcoin are rising, and the US dollar continues to strengthen? Too many questions remain unanswered."

Due to Iran's control over the Strait of Hormuz, Brent crude oil has surged to around $112 per barrel. Although high oil prices are affecting the US economy through gas stations and could trigger renewed inflation while dampening consumer confidence, US stock markets have shown unusual resilience.

The S&P 500 has declined by more than 5% since the start of the conflict but has not yet reached the 10% correction threshold. Analysts note that Wall Street is currently engaged in a strategy referred to as "TACO"—meaning "Trump Always Chickens Out." Investors are betting that the Trump administration will ultimately opt for tactical retreat or some form of compromise to avoid the worst economic outcomes.

In the bond market, the traditional "flight to safety" is also absent. The yield on 10-year US Treasury bonds has climbed above 4.39%. Mark Hackett, Chief Strategist at Nationwide Investment Management Group, pointed out that this reflects investor concerns more about inflation driven by soaring oil prices and the risk that the Federal Reserve may be forced to raise interest rates, rather than seeking safety in bonds.

Regarding gold's unusual decline, Fawad Razaqzada, an analyst at StoneX, suggested that the pressure from a stronger US dollar and higher yields is outweighing safe-haven demand. Additionally, gold had already risen more than 60% in 2025, and the current decline appears more like profit-taking after a significant rally.

Liz Thomas, Head of Investment Strategy at SoFi, further explained that gold began exhibiting characteristics of a speculative asset late last year. "Assets that have performed well in the market are now being 'punished.' When fear strikes, investors tend to sell off the most profitable holdings first, and gold clearly falls into that category."

Currently, global investors are in an extremely awkward pricing vacuum: geopolitical risks are escalating, but the old safe-haven playbook seems to have lost its effectiveness. As industry experts note, different markets are sending conflicting signals about the same conflict, and the real economic impact may only just be beginning.