Has gold lost its luster as a safe haven?
The sharp decline witnessed by the yellow metal throughout 2026 sowed doubt among citizens and residents who had long viewed gold as a store of value and a hedge during crises, prompting the question: Has gold lost its luster as a safe haven, or is its recent downturn merely a correction following an exceptional rally?
Experts told "Al-Siyasa" that it is too early to claim that gold has lost its status as a safe haven, noting that the sharp drop in the metal’s price during 2026 should be viewed within the context of an exceptional price cycle. This followed record highs exceeding $5,500 per ounce in January, before retreating to below $4,000 in late June.
They clarified that what has changed is not gold’s status, but rather the rules governing its trading. War is no longer the sole determinant of the metal’s direction, given the interplay of multiple factors including the US dollar, interest rates, bond yields, inflation, global liquidity, investment fund movements, and central bank purchases. This means that war has become just one component of the gold equation.
Despite the sharp price volatility, experts maintain that gold retains its investment appeal, a fact reflected in demand trends in the Kuwaiti market.
For his part, precious metals expert Alaa Bahbahani affirmed that it is premature to say gold has lost its shine as a safe haven. He explained that the sharp decline in 2026 must be seen in the context of an exceptional price cycle, after hitting record levels above $5,500 per ounce in January before falling below $4,000 in late June.
Speaking to "Al-Siyasa," he stated that a significant portion of the decline represents a correction of price excesses and the unwinding of investment positions accumulated during the rally, rather than a collapse in the fundamentals supporting gold in the long term.
He pointed out that there is a difference between a "safe haven" and an "asset that does not decline." Historically, gold is a safe haven, but it can still experience sharp corrections even during crises. In fact, it may be sold when investors and institutions need liquidity or to cover losses in other markets. Gold has not lost its status as a safe haven, but 2026 has once again proven that a "safe haven" does not mean a risk-free investment.
He emphasized that the continued interest of central banks in increasing their gold holdings reflects the asset’s enduring role as a strategic reserve for diversification and risk hedging. He considered the current correction not as the end of gold’s story, but as confirmation that defensive assets can become overvalued and subject to significant volatility.
Regarding the impact of war, Bahbahani said the relationship between geopolitical tensions and gold is not automatic. War may support the metal if it increases fears about the financial system, undermines confidence in currencies, or lowers real yields. However, it can also exert downward pressure.
He predicted that gold prices would remain highly volatile in the coming period.
Changing the Rules of the Game
For his part, gold expert Almdar Al-Mousawi confirmed that gold has not lost its status as a safe haven, but noted that the rules governing its trading have changed. He explained that war is no longer the sole factor determining the metal’s direction, given the interplay of factors including the dollar, interest rates, bond yields, inflation, global liquidity, fund movements, and central bank purchases.
He stated that the traditional equation linking war to rising gold prices no longer operates with the same simplicity, as the metal may decline even amid escalating tensions, particularly if institutions and investors had previously bought in anticipation of escalation and then moved to take profits once the event occurred. He clarified that war has become part of gold’s equation, but not the entire equation; the dollar, interest rates, bonds, central banks, liquidity, and fund flows are factors no less significant.
He pointed out that the divergent forecasts of global financial institutions regarding gold prices reflect a state of uncertainty, emphasizing that the metal’s future cannot be reduced to a single figure, but is instead tied to economic and political scenarios, as well as developments in interest rates and the dollar. He advocated for gradual buying rather than deploying the full amount of liquidity in a single transaction, stressing the importance of defining investment objectives in advance—whether for long-term savings or protecting savings—while maintaining emergency liquidity.
A store of value
For his part, gold expert Mohamed Hatem affirmed that claims that gold declined during 2026 or lost its luster as a safe haven are inaccurate. He explained that while the metal has retreated from its peak levels, it remains close to its 2026 opening levels.
Speaking to Al-Siyasa, he noted that gold reached levels of $5,500, whereas it is currently trading around $4,350. Therefore, a more accurate description is a pullback from the peak, rather than a decline from the beginning-of-year levels. He added that geopolitical developments and the recent war between Iran and the United States had a greater impact, particularly due to their connection to a sensitive region for the energy market around the Strait of Hormuz. This prompted investors to anticipate higher oil prices and shift part of their liquidity from gold to oil in search of faster returns.
