How Does War Affect the Gold and Silver Price?


How might an expanded war between Israel and Hamas/Iran affect the gold and silver price? See what can be learnt from past wars and how they impacted precious metals prices…

Estimated reading time: 9 minutes

War and Gold and Silver Prices

There have been a number of wars started or threats of war in recent years. So how have each of these affected the gold and/or silver price?

Gold Price Bounces After Iran Drone and Missile Attack on Israel

Iran launched a drone and missile attack on Israel over the weekend. The gold price spiked higher as a result getting well above US$2400. But then also pulled back so that today (Monday) gold is down about $30 from where it was on Friday. Gold had also risen sharply higher over the previous 6 weeks. So gold was already in a strong uptrend. So how much impact is an expanded middle east war likely to have on the price of gold?

Gold Price Bounces After Israeli Declares War on Hamas

Israel declared war against Hamas In October 2023, following an attack into Israeli from the group that controls the Gaza Strip. There were questions over how such a large force got across the tightly controlled Israeli border. But regardless Israel launched multiple counter attacks into Gaza. Both sides reported they were ready for a long war.

The outbreak seemed to boost the gold price..

However the gold price had fallen sharply in the previous 2 weeks and gold and silver were both very oversold as the attack took place. Therefore precious metals were likely already due for a rebound.

How might a war with Russia affect the gold price?
How might a war with Russia affect the gold price?

Gold Rose in the Lead up to the War in Ukraine

Back in February 2022 as tensions built between Russia and Ukraine, but before war broke out, the gold price seemed to have been boosted higher.

However the gold price had been building since October. Plus a record high inflation report was also released in the USA about the same time. So again it can be difficult to determine the level of impact on the price of gold.

Troubles with Iran in 2020 Also Sent Gold Higher

Back in January 2020, then US President Donald Trump ordered the killing of Iranian General Qassim Soleimani. President Trump argued that the assassination was “to stop a war, we did not take action to start a war.”

How might a war with Iran affect the gold price?

Trump said: “He was plotting imminent and sinister attacks on American diplomats and personnel but we caught him in the act and terminated him.”

Iran then said they would retaliate for the death of the general.

There was plenty of rhetoric from both sides, and so the odds of conflict or even war with Iran did certainly rise. But in the end tensions dropped and nothing more serious happened.

However, this recent drone and missile attack on Israel by Iran is again raising concern of a much wider and longer war in the middle east.

Tensions With North Korea Also Boosted the Gold Price

Looking further back, in August 2017, we also saw the price of precious metals rise quite sharply. At the time some commentators alluded to the heightened tensions with North Korea as the reason for this rise. As Bloomberg reported:

President Donald Trump ratcheted up his rhetoric against North Korea to an unprecedented level Tuesday, warning Kim Jong Un’s regime will face a devastating military strike if it continues threatening the U.S. “North Korea best not make any more threats to the United States,” Trump told reporters in Bedminster, New Jersey. “They will be met with fire, fury and, frankly, power the likes of which this world has never seen before.”

Do gold and silver prices rise with war?

Gold and silver did rise the same day. However both metals had fallen sharply prior to this period of tension. And when gold and silver are oversold, as they had been prior to August 2017, sharp rises in their respective prices are not unexpected.

We’d say the prevailing wisdom is that the gold price rises with war, due to a flight to safety. But is this actually the case?  

Does War Cause Gold and Silver to Rise?

Rather than simply prognosticating about what might happen should this war between Israeli and Hamas expand into a wider and more prolonged war, perhaps we should look at what has happened in the past. That is probably the most effective way to consider how yet another war might affect the gold and silver price.

We were about to create a gold chart and plot a number of historical wars on it and compare the results. But there’s no sense in recreating the wheel. Given this has already been done, we can borrow others research.

This chart from Market Realist looks at a number of past international skirmishes including the early 2000’s:

Chart of War vs Gold Price

Upheavals during the 1970s

The late 1970s saw many upheavals, including the Iranian Revolution in 1978, the Iran-Iraq war in 1979, the Soviet Union’s invasion of Afghanistan in December 1979, and the Iranian hostage crisis in 1979. As you can see from the graph above, this period saw heightened activity in gold prices. Gold prices rose 23% in 1977, 37% in 1978, and an incredible 126% in 1979.

[GSG Editors Note: Of course the gold price did rise significantly in the later half of the 1970’s. So did these wars cause the price to rise or did they merely happen during a bull market in gold?]

Other wars

During the first Gulf War, when Iraq invaded Kuwait in 1990, gold prices soared again. But soon after, gold returned to pre-war levels as talks of war continued. However, soon after the war was over, gold prices continued to soften, and by the end of 1991, they had reached almost the level they were at pre-invasion. After that, gold continued its downward trend as disinflation took hold.

After September 11, 2001, attack on the United States, gold prices surged. This move was followed by the US invasion of Iraq in 2003. This also resulted in an uptrend in gold prices. However, after a degree of confidence built up that the war would be short and successful, gold reverted to its pre-war value.

Even in 2014, when rumors started that the United States could intervene in Syria, gold prices reacted strongly.


So this points to gold rising in the lead up or upon rumours of war. But then correcting back to similar levels it was at pre-war, after the war actually begins.

How Might A War with North Korea Affect the Gold and Silver Price?
If a war broke out with North Korea what affect would this have on the price of gold or silver?

Perhaps not surprising really.

As many markets follow the “buy the rumour, sell the fact” theory. Meaning once the official news actually arrives, the market has already “priced in” the event.

Some other research by Jan Skoyles backs up this theory further:

Talk of war and the act of war clearly affects the gold price. The price of the yellow metal obviously continued to climb after each of the three examples we provide. But in truth very little happens when the talk of war turns into action.

This brief look at a small selection of wars suggests that the gold price peaks prior to and at the beginning of military action, before returning to levels seen not long before. It then, of course goes on to extend its bull run. But how much of it was to do with wars that happen in the Middle East?

We believe very little, whilst geopolitical instability clearly is a driver for the gold price, it does not obviously have a long-term impact on the price of bullion. It may be interesting however to look at how the economic impact of wars go on to affect the price.

For instance, what many appear to forget when they discuss Syria, tapering and gold in the same breath, is that a war means money printing will have to happen regardless of what you call it.


So the evidence seems to say that war does not appear to have a lasting impact on the price of gold and silver bullion.

However, we think there is still a chance that a major war might have a noticeable impact on bullion prices.

Take the earlier mentioned example of the wars in the later half of the 1970’s. We noted that the prices of gold and silver were already rising and in a bull market before these wars occurred.  

But Could A Previous War Have Caused the Gold Price to Rise in the 1970’s?

Vietnam War and the Gold Price
How did the Vietnam War affect the gold price?

The Vietnam War ran from 1959 to 1975.

The spending required to fund this war is often cited as one of the key reasons for Nixon severing the last link of the US dollar to gold in 1971.


Because the end of the gold exchange standard allowed the USA to continue spending massively on “guns and butter” (war and social programs). The USA no longer had to send its gold reserves to foreign creditors as it had done to fund its spending throughout the 1960’s.

Thus, this increase in the amount of currency created up until 1975 likely caused the large rise of the gold price in the late 1970’s.

Most Likely it is the Length and Severity of a War that Affects the Gold Price

So rather than saying war causes the gold price to rise, perhaps we can say the increase in spending, government debt and currency creation during times of major war, eventually causes the gold (and silver) price to rise.

Therefore it may be that the key factor affecting gold and silver prices is the length and severity of a war.  

What Might We Expect if a War Between Israel and Hamas and Now Iran Expands?

Any short skirmish between Israel and Iran would likely go the way of many of these other shorter term wars.

That being gold and silver prices would rise as the war initially breaks out, then correct back down after a short period of time.

It would probably take a long lasting battle of many years also expanding into many other nations to have a lasting impact on precious metals prices. We certainly hope that doesn’t eventuate.

As a comparison, the ongoing war between Russia and Ukraine did not appear to have a major impact on the price of gold through to late 2023. In US dollar terms the price of gold in October 2023 was still no higher than it was in February 2022. However as with the Vietnam war the impacts caused by higher inflation may not appear until some years down the track. Perhaps the run up in gold over the past 6 weeks is a reflection of these wars becoming more long lasting?

Geopolitical tensions in the Middle East can indeed lead to increased demand for gold, as investors seek safe haven assets. Historically, wars in the region have caused gold prices to fluctuate. While the short-term impact of the recent attack is uncertain, it’s important to remember that the long-term effects of wars on gold prices are complex and depend on a variety of factors.

War on Terror and Gold Prices

This is likely what we have seen with the “war on terror” the US has been aimlessly waging since 2001. The spending on this has most likely already had an impact on gold prices. As it has added to the need for the USA to expand its debt and monetary base.

But our bet is that the ongoing breakdown of the global monetary system is likely to be the main reason for the rising gold price since 2001. It will likely be the main reason for a continuing rise in precious metals prices too. So war could be a factor in gold rising, but it’s probably not the main one.

Editors Note: This post was first published on 14 August 2017. Updated 14 February 2022 to include new details about a potential war with Russia. Updated 10 October 2023 to include the war between Israel and Hamas. Last updated 15 April 2024 after Iran missile strike on Israel.

Have You Considered Storing Some Precious Metals Offshore?

War can be a very good reason to hold some precious metals offshore. New Zealand is a long way from Iran and is known as one of the top 5 best places to store gold offshore (source: Nomad Capitalist).

Discover 12 other reasons you should store some gold and silver bullion in New Zealand: Offshore Gold and Silver Bullion Storage in New Zealand)