Turbulent Financial Markets: Dollar Soars While Gold Stumbles
by Ryu Hyunseok
Published 04 Mar.2026 11:13(KST)
Updated 04 Mar.2026 13:56(KST)
Safe-Haven Assets Diverge Amid Iran War
Dollar Hoarding as Bonds and Stocks Weaken
Dollar Index Surpasses 99; Gold Prices Plunge on Rate Freeze Expectations
A decoupling phenomenon is emerging between the US dollar and gold prices amid the ongoing war between the United States and Iran. Traditionally, these two assets have been regarded as safe havens and have tended to move in the same direction, but this time, their values are moving in opposite directions. The value of the dollar has risen due to increased demand for cash (dollars) caused by the war, while gold prices have fallen as expectations for a freeze in benchmark interest rates have grown. However, some analysts predict that if the war heightens concerns over the US fiscal burden, the value of the dollar could decline again.
On March 3 (local time), the dollar index-representing the value of the dollar against six major currencies on the ICE Futures Exchange-closed at 99.05, up 0.68% from the previous trading day. In contrast, the price of gold, a traditional safe haven, declined as the dollar strengthened. On the New York Mercantile Exchange, gold futures for April delivery recorded USD 5,107.70 per ounce, a drop of 3.85% from the previous session.
Foreign media have analyzed that as government bonds and stocks weakened, investor moves to secure dollars have intensified. According to Reuters, "Simultaneous selling pressure in both government bonds and stocks has added further pressure on gold prices," adding, "When a sharp stock market correction occurs, investors often liquidate their holdings of safe-haven assets such as gold in order to secure cash."
On the other hand, gold prices have further declined as expectations for an interest rate cut have diminished. The surge in oil prices due to the war is fueling concerns over inflation. This is serving as a basis for the outlook that the US Federal Reserve will delay cutting its benchmark interest rate. Although gold is considered a representative safe asset, its relative appeal increases when interest rates are low. Yield-generating assets, such as bonds, pay interest, but precious metals like gold do not provide interest income, so lower interest rates make gold more attractive to investors. Bob Haberkorn, Senior Market Strategist at RJO Futures, stated, "The decline in gold prices appears to be due to a preference for liquidity, that is, a flight to cash," adding, "The dollar is strengthening, and government bond yields are also rising."
There are also predictions that the dollar's upward trend may not be sustained. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, told Reuters, "If this conflict worsens the US fiscal situation and economic outlook, it could weigh on the dollar." He explained, "Wars often begin with an overwhelming military shock but eventually become quagmires, and this generally becomes a negative factor for the dollar."
Meanwhile, until the previous day when the market reopened after the outbreak of the Iran war, the prices of the dollar and gold had moved in the same direction. The dollar index rose 0.77% from 97.61 on February 27 to 98.38 on the previous day. During the same period, gold also rose from USD 5,247.90 to USD 5,311.60. The preference for safe-haven assets pushed up the prices of both assets. Even amid geopolitical uncertainty, gold and the dollar are commonly regarded as safe assets because their value tends to remain relatively stable.
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