How Does War Affect the Gold and Silver Price?

How might an expanded war between Israel and 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: 10 minutes

Recent Surge in Gold & Silver Amid Israel–Iran War (June 2025)

On 13–14 June 2025, Israel launched a major strike called Operation Rising Lion, hitting over 100 sites across Iran. These included nuclear, missile, and military facilities. Iran quickly struck back with drones and ballistic missiles in a response called Operation True Promise III.

Market Reactions: Safe-Haven Surge

• Gold spiked ~ 1.3–1.7%, hitting a 5‑week high near $3,427–3,446 /oz on 13 June, driven by safe-haven buying [source].
• Silver held firm above $36/oz, with a modest drop early in the week; gold-to-silver ratio widened to ~94:1 [source].

Oil & Broader Macro Effects

• Brent crude soared ~ 5–11%, nearing $75+/barrel, as worry over Strait of Hormuz disruptions intensified [source].
• U.S. equities declined 1–2%; bond yields softened due to a growing tsunami of “risk‑off” sentiment [source].

NZD‑Gold Impact

• Globally higher gold prices often translate into sharper rises in NZD terms, amplified by the NZD weakening against the USD. This has been the case today with NZD gold up over 2.5%.
• The hawkish outlook on oil and risk premiums could intensify today’s NZD decline—especially important for Kiwi investors.

Chart: Gold Price Reactions to Conflicts 2017-2025

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?

This chart shows how gold has reacted to key geopolitical events over the last decade — surging in the short term, but often falling back if things de-escalate. The latest escalation between Israel and Iran on 14 June 2025 saw gold rally — although it had already been bouncing back prior to this.

Recent Conflicts and Gold’s Reaction (2017–2024)

The 2025 Israel–Iran conflict has once again pushed investors toward safe-haven assets like gold. But it’s only the latest in a series of global events over the past decade that have moved gold prices. Here’s a quick look at how gold has reacted during some of these recent tensions.

2024: Iran Drone and Missile Attack on Israel

Gold prices jumped after Iran launched a major attack on Israel in April 2024, briefly reaching new highs as investors looked for safety. But gold pulled back within a few days.

2023: Hamas–Israel War

After Israel declared war on Hamas In October 2023, gold rallied over 5% in the weeks that followed. However, the price later consolidated as immediate fears eased.

2022: Russia–Ukraine Invasion

Gold spiked above USD $2,000/oz after Russia invaded Ukraine in February 2022, but then pulled back. The war is still ongoing and may have helped keep gold prices higher on average (see our conclusion for more on this).

2020: US–Iran Missile Escalation

After a U.S. airstrike killed Iranian General Qasem Soleimani, gold jumped above $1,600/oz. But the surge was short-lived, as prices fell once tensions eased.

2017: North Korea Missile Tensions

North Korea’s missile tests and nuclear threats triggered a short-term gold rally, with prices peaking around $1,350/oz. But gold soon fell as the threat level dropped.

Does War Cause Gold and Silver to Rise? Historical Patterns & Long-Term Wars

Apart from the Russia–Ukraine war, the rest of the above conflicts have mostly been short term in nature. But what about longer-lasting wars? That is probably the most effective way to consider how yet another war might affect the gold and silver price.

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

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.

Source. 

So this points to gold rising in the lead-up to war, or when rumours of conflict spread. But then it often corrects back to pre-war levels once the fighting actually begins.

Perhaps not surprising really.

Many markets follow the “buy the rumour, sell the fact” theory. This means that once the official news hits, 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.

Source: therealasset.co.uk

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

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

Take the earlier example of the wars in the late 1970s. 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?

How did the Vietnam War affect the gold price?

The Vietnam War ran from 1959 to 1975.

The cost of funding the war is often cited as a key reason why President Nixon cut the last link between the US dollar and gold in 1971.

Why is that?

Because ending the gold exchange standard allowed the U.S. to keep spending heavily on both military operations and domestic programs — often called “guns and butter.” Once the dollar was no longer backed by gold, the U.S. didn’t have to ship gold overseas to settle debts as it had during the 1960s.

As a result, this increase in currency creation likely helped fuel the sharp rise in gold prices seen in the late 1970s.

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

So it’s more accurate to say that war doesn’t directly push gold prices higher. But when a major war leads to more government spending, rising debt, and money printing, gold and silver prices often rise over time.

Therefore, the key factor affecting gold and silver may be the length and severity of a war.

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

Any short skirmish between Israel and Iran would likely follow the pattern of other short-term conflicts.

That means gold and silver prices might spike when the war first breaks out, but then pull back shortly after.

It would likely take a long-lasting war that spreads across multiple countries to have a lasting impact on gold and silver prices. Hopefully, that won’t happen.

As a comparison, the ongoing Russia–Ukraine war didn’t appear to have a major impact on gold prices through to late 2023. In USD terms, the gold price in October 2023 was still no higher than it was in February 2022. However, as with the Vietnam War, the effects of higher inflation may not show up until years later.

Geopolitical tensions in the Middle East can increase demand for gold, as investors look for safe haven assets. In the past, wars in the region have caused gold prices to move sharply.

The short-term impact of the latest attack is still unclear. But over time, wars tend to affect gold in complex ways that depend on many different 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.

Main Gold Price Driver? War or Global Monetary System Breakdown

Our view is that the ongoing breakdown of the global monetary system is the main reason gold prices have been rising since 2001. It will likely continue to drive precious metals prices higher in the years ahead.

War may be a factor, but it’s probably not the main driver of long-term gold gains.

“In the period post‑Russia’s invasion of Ukraine, Central Banks have added 3,093 t to their reserves.” (See: The Two-Tiered Gold Market: Why Central Banks Are Hoarding Gold While Retail Investors Sell Theirs)

Central banks didn’t start buying gold just because of short-term war fears. Their buying was a strategic response to the way the U.S. dollar was used as a weapon—through sanctions and the freezing of foreign reserves. This shows how wars can cause big, lasting shifts in global monetary policy—and help drive up gold demand.

That’s why we often describe gold as your financial insurance.

View our gold and silver bullion range and take the next step in protecting your purchasing power.

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)

Gold and War FAQs