Gold ETFs Log Worst Week in 15 Years Amid Iran War Jitters: Buy the Dip?

Gold prices capped their steepest weekly loss in 15 years as investors assessed the economic fallout from the escalating U.S.-Iran conflict. For the week, gold tumbled 9.6% — its biggest drop since September 2011 – and is now on track for its worst monthly performance since October 2008, as quoted on CNBC.

Gold bullion-based exchange-traded fund (ETF) SPDR Gold Trust GLD retreated 10.4% last week. Despite the sharp pullback, GLD is up about 3.8% in 2026, reflecting strong gains prior to the Middle East crisis.

War-Driven Volatility and Oil Surge Weigh on Markets

The ongoing conflict has fueled sharp swings across global markets, particularly in commodities. Oil prices surged past $112 per barrel on Friday, intensifying concerns about inflation and economic stability.

Strong Dollar: A Negative for Gold

Note that the U.S. dollar has been gaining amid the current geopolitical tension. Invesco DB US Dollar Index Bullish Fund UUP added 2.2% over the past month (as of Mar. 20, 2026).

Although the U.S. currency underperformed in recent months and is even down about 3% over the past one-year period, the latest rally in the safe-haven currency – the greenback – went against the gold rally. Gold is priced in U.S. dollars, and hence any uptick in that currency acts against the yellow metal.

Uptick in U.S. Treasury Yields

Surging oil prices amid the Iran war have heightened concerns about persistent inflation, which could push central banks to keep interest rates elevated. The benchmark U.S. Treasury yield started the month at 4.05% and hit 4.39% on Mar. 20, 2026. Rising Treasury yields are limiting gold’s upside. Higher yields tend to boost the appeal of interest-bearing assets like government bonds, reducing demand for non-yielding assets such as gold.

Overvaluation Concerns?

Gold has experienced a significant rise in recent months, with GLD gaining about 50% over the past year. It is no surprise that some investors are cautious about increasing exposure to bullion, citing overvaluation concerns.

Need for Cash?

During periods of market stress, investors sometimes sell even traditional safe-haven assets to raise cash. After all, at times of heightened uncertainty, cash often behaves like king. Such liquidity-driven selling may temporarily pressure gold prices before the metal regains momentum.

According to Arthur Parish, metals and mining analyst at SP Angel, the recent selloff reflects a sharp reversal of momentum-driven gains seen ahead of the U.S.-Israel strikes on Iran in late February, as quoted on CNBC.

He noted that much of the earlier rally has now been “completely unwound,” with momentum trades rapidly leaving the market.

What Lies Ahead?

Despite the near-term pressure, major banks remain optimistic about gold’s longer-term prospects. Analysts at JPMorgan Chase expect the metal to climb to around $6,300 per ounce by the end of 2026 (as quoted on CNBC), while Deutsche Bank maintains a year-end target near $6,000.

Gold dropped to $4,570 per ounce on Friday (per Trading Economics). Hence, these banks’ views suggest a bullish outlook. We suggest investors keep track of oil prices, inflation and bond yield momentum — factors that could weigh on a gold rally.

Despite short-term volatility, experts suggest that the broader outlook for gold remains tied to structural factors rather than daily market movements. Against this backdrop, investors with a strong stomach for risks may use the current dip as a buying opportunity. Gold ETFs include iShares Gold Trust IAU, SPDR Gold Minishares Trust of beneficial interest GLDM and abrdn Physical Gold Shares ETF SGOL.

Boost Your Portfolio with Our Top ETF Insights

Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.

Don’t miss out on this valuable resource. It’s free!

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research