How Geopolitical Risk Impacts Gold Demand

Gold is known as a safe haven asset, which means investors often flock to it in times of uncertainty and instability.

As a result, geopolitical risk can strengthen gold investment demand, but it's a less reliable trigger for price movement than you might think. 

Gold gained 25% in U.S. dollar terms in 2020 as the Covid-19 pandemic impacted the global economy. During the turmoil of March 2026, it fell nearly 12% as conflict escalated between the U.S. and Iran. Both periods brought profound uncertainty and economic upheaval. Yet, gold behaved differently each time.

The different outcomes show why protecting your wealth requires looking beyond the headlines. Interest rates, currency movements, and investors' need for liquidity also shape the outcome.

At Asset Strategies International, we believe gold deserves consideration as long-term wealth insurance. Events like the Covid-19 pandemic, the Russia-Ukraine war, and the U.S.-Iran conflict offer useful lessons about what that role means in practice.

Why Do Global Crises Increase Interest in Gold?
Geopolitical upheaval encourages investors to reassess exposure to financial institutions, currencies, and conventional investments. Gold appeals because physical bullion is a tangible asset rather than a promise to repay from a corporate or government issuer.

Yet, while geopolitical risk increases interest, that doesn't always lead to an increase in demand

Demand also needs a precise definition. Jewelry, investment, central banks, and technology represent different sources of gold buying. A crisis can increase investment demand while weakening consumer purchases. ETF flows provide one investment-demand measure, but they do not represent the entire market.

COVID-19: Strong Investment Demand Amid Economic Disruption
The pandemic strengthened gold investment demand through economic uncertainty and the policy response to it. Although COVID-19 was a public-health and economic shock rather than a military conflict, it illustrates how global instability can change investor priorities.

Gold returned 25% in U.S. dollar terms that year. Investment demand increased 40%, supported by uncertainty, low interest rates, and policy responses to the pandemic.

Yet total reported gold demand, excluding over-the-counter activity, fell 14%. Jewelry demand weakened sharply. The lesson is important: stronger investment demand and a rising gold price do not necessarily mean every part of the gold market is expanding.

For your portfolio, that distinction helps separate gold's wealth-preservation role from changes in consumer spending.

Russia-Ukraine: Safe-Haven Buying and a Subsequent Retreat
The Russia-Ukraine war supported a flight into gold in early 2022 as investors assessed military escalation, sanctions, and economic disruption. Gold moved above $2,000 per ounce in early March, but the price subsequently retreated.

The World Gold Council's March 2022 report recorded global gold ETF inflows of 187.3 tonnes. Gold ended the month at $1,942 per ounce, up 1.7% for March and 7.6% for the first quarter.

Those figures show both increased investment interest and the limits of a headline-driven trade. Buying intensified, yet the price did not hold its early-March peak. Inflation, monetary policy, and changing perceptions of the conflict remained part of the picture.

U.S.-Iran: Why Conflict Did Not Prevent Gold's Decline
The ongoing 2026 U.S.-Iran conflict illustrates how severe geopolitical risk can coexist with falling gold prices. After peaking at $5,500 an oz. (the all-time record high) in February, gold declined until hitting the bottom of the range around $3,800-3,900 over the summer, despite elevated tensions and renewed inflation concerns from the resulting energy crisis from the closure of the Strait of Hormuz.

Gold fell 11.8% in March as the pullback began, and in its March 2026 analysis,the World Gold Council identified deleveraging and liquidity pressures as major drivers. Global gold ETFs lost $12 billion during the month, while dollar strength and yields also contributed to selling pressure.

Investors sometimes sell liquid assets to meet obligations or reduce borrowing elsewhere. Gold can therefore come under pressure precisely when financial stress is rising. Calling it a safe haven should never imply that its price must rise during every crisis.

For investors, the practical response is to consider gold within a broader portfolio risk strategy, rather than expecting protection against every short-term market move.

Build Your Gold Strategy Before Headlines Drive Decisions
A disciplined gold strategy starts with your reason for owning the metal. Wealth preservation, access to tangible assets, and portfolio diversification are more durable foundations than a prediction about tomorrow's conflict headlines.

Your precious metals allocation should reflect your circumstances, time horizon, and ability to tolerate price fluctuations. Avoid assuming that one allocation fits everyone or that gold removes the need for other assets.

A scheduled purchasing approach, such as dollar cost averaging, can reduce reliance on a single entry point. It does not guarantee a lower purchase price or a profit.

ASI helps you compare physical metals and storage options. We encourage you to establish a deliberate ownership plan rather than letting each new headline dictate your next purchase.

Position Your Wealth for Uncertainty With Purpose
Gold's response to global crises depends on more than the severity of the news. The pandemic supported investment demand and annual gains. The Russia-Ukraine war prompted buying and a subsequent price retreat. The 2026 Iran conflict coincided with substantial selling pressure and rising inflation.

Our conviction is straightforward: gold deserves consideration as part of a long-term wealth-preservation strategy. It is wealth insurance, plain and simple. Own it for a defined purpose, understand its risks, and keep your decisions grounded in your goals.

Call Asset Strategies International at 800-831-0007 or email us at infoasi@assetstrategies.com to discuss physical gold and storage options. Let us help you take practical steps to help you Keep What's Yours, regardless of geopolitical risk.