Gold slips amid Iran war turmoil; what should investors do?

Gold prices have corrected over 1.6 percent over the last 20 days. From Rs 1,59,097 for 10 grams on February 27, the IBJA benchmark rate had softened to Rs 1,56,600 by March 17 noon.

The precious metal saw high volatility before settling lower. It surged to Rs 1,67,471 on March 2, the highest during the period, on the back of global uncertainty and safe-haven demand, as the US and Israel war on Iran triggered global uncertainty.

The rally did not sustain and prices began to ease as quickly as they climbed. Gold slipped to Rs 1,62,548 on March 4 and hovering near the Rs 1,60,000 mark between March 5 and March 11. There were spells of recovery but the overall trend was weak.

This slide suggests that the initial geopolitical premium has fizzled away, as a stronger dollar and market pressure weigh on gold.

Why is the price falling?

Gold rose nearly 75 percent in 2025. The decline has been primarily driven by a stronger dollar, higher bond yields and fading hopes of a rate cut by the US Federal Reserve.

Profit-booking after the sharp rally in and a change in investor sentiment have weighed on precious metals. Volatility often leads to unwinding of leveraged positions, accelerating price drops.

"At this point, the decline looks more like a correction than the beginning of a bear market. Gold has experienced a strong rally in recent months, therefore, some price correction is warranted. Structural factors such as geopolitical tensions, gold purchases by central banks, and inflationary pressures will continue to support gold," India Bullion & Jewellers Association (IBJA) vice president Aksha Kamboj, who is also the executive chairperson of Aspect Global Ventures, said.

Augmont head of research Renisha Chainani said after a strong rally, markets typically undergo healthy retracements of around 10–15 percent, as investors book profits and reposition portfolios.

Continued geopolitical uncertainty, monetary easing, and strong investment demand from ETFs and central banks provide a durable floor for prices. "Therefore, short-term volatility should be viewed as consolidation within an ongoing secular bull market," she said.

What should investors do?

Investors should avoid panic selling during short-term corrections and instead focus on long-term strategy.

Market volatility is a reminder of the importance of diversification and of not acting on market fluctuations.

"The precious metals remain a hedge against inflation and geopolitical tensions, and it is still important to have a balanced portfolio allocation. It is recommended that investors make staggered investments rather than lump sums," said Kamboj.

Chainani said the pullback is an opportunity to gradually accumulate precious metals rather than exit the market.

Periodic corrections help rebalance valuations and allow long-term investors to build positions at relatively better prices.

“From a portfolio perspective, gold remains a strategic diversifier against inflation, currency debasement, and geopolitical risk. Many asset-allocation frameworks are shifting from the traditional 60/40 model toward a 60/20/20 approach, increasing allocation to real assets such as gold,” she said.

It is important that investors maintain a disciplined allocation strategy, using price dips to increase exposure while keeping precious metals as a long-term hedge in diversified portfolios.