The gold at the dawn of a major geopolitical change

Sticking to a few days of trading to settle the debate would be an analysis error.
Since the beginning of the year, the dynamics of the gold price have been the subject of much discussion. Critics will quickly point out the correction recorded at the time of the Israeli-American intervention in Iran, while optimists will note that with an 8% increase in just the first quarter, gold was among the best performing asset classes, even with the decline. However, basing the debate on just a few days of trading would be an analysis error.

Profits and Liquidity: What explains the March correction
To understand the real reasons behind this volatility, one should look at the World Gold Council’s perspective. According to the institution, the March correction was due to a massive sale of gold ETFs, indicating profit-taking after the surge in January and February, coupled with a search for liquidity and a closing of leveraged positions. These sales were particularly significant in Europe and the United States, while Chinese investors continued to buy. Moreover, China has never acquired as much physical gold, including bars and coins, as in the first quarter of this year. This dichotomy reveals fractures in geopolitics.

Iran: A long-term catalyst for the yellow metal?
Beyond short-term noise, the Iranian conflict could represent a lasting turning point. A study published in late 2025 by Arslanalp, Eichengreen, and Simpson-Bell for the National Bureau of Economic Research (NBER) sheds light on this phenomenon. The authors first point out a structural fact: gold has now surpassed the euro as the second reserve asset of central banks worldwide. China, India, Turkey, and Poland are among the most frequent buyers in recent years.

Their analysis also highlights a clear link: the more a country maintains close economic ties with Washington, the higher the share of the dollar in its reserves. According to the authors, geopolitical alignment with the United States, measured by the existence of a defense pact with the United States, increases dollar reserves. Conversely, greater independence of central banks is associated with lower dollar holdings. The Iranian conflict could erode this trust. Europe seeks a common defense independent of American influence. Gulf countries have faced an unwanted conflict. As for the BRICS, they have no reason to align with the current administration’s policies.

In this context, Deutsche Bank released an analysis in late April with striking projections. Its strategists estimate that central banks of emerging countries, especially China, hold between 15% and 20% of their reserves in gold, a proportion that has been steadily increasing for fifteen years. Based on constant reserves (around $8000 billion today for emerging countries), three scenarios emerge: $4000 per ounce if the share of gold declines to 15%, $5300 if it approaches 20%, and up to $11,600 if gold’s share in the reserves of emerging countries returns to its historical average of 40% over 75 years.

The post-Iran strike correction that gold experienced does not diminish its relevance in the face of geopolitical changes we are facing. On the contrary, by exacerbating tensions between blocs and fueling American isolationism, this conflict could paradoxically be one of the most powerful long-term support factors for gold. Gold may not be done surprising us yet.