Gold loses shine despite shock of war

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The price of gold surged last year as investors hedged against geopolitical turbulence. You might have expected this bull run to continue during the Iran war, but at one point yesterday its value had fallen 20% compared to pre-war levels. This is down to several factors. One is the ebullient US dollar, driven by a surge in oil prices. Since gold is usually priced in dollars, a stronger greenback makes the metal less attractive. Another reason is rising bond yields, which increase the opportunity cost of holding assets like gold. Traders are also selling off the metal to free up liquidity, so they can cash in on the opportunities offered by volatile stocks. These have see sawed in recent weeks, offering high short-term returns to those willing to take risks.