Gold fails, safe haven throne faces a crisis of trust

(1) Against the backdrop of the ongoing escalation of the US-Iran conflict over the past week, gold has sent a warning signal. This asset, traditionally regarded as the ultimate safe haven, has failed to provide any substantial protection, with its price movement sharply contrasting with conventional market expectations. (2) Since the outbreak of the conflict, the price of gold has fallen by more than 3% cumulatively. Although it is not unprecedented for risk assets and gold to decline simultaneously, given the current environment of sharply rising geopolitical risks, gold as a safe-haven tool should have performed better. This obvious underperformance constitutes a key point of doubt. (3) The core issue is that when textbook-level positive news emerges, gold still fails to attract sustained buying support. This forces the market to reconsider its path of least resistance. Once there are any signs of easing in the future situation, even the initial glimmer of a ceasefire, gold may face a directional choice. (4) At that time, those fragile long positions built on the conflict narrative are likely to be squeezed out. This means that in the short term, the risk for gold is to the downside, and a significant correction may occur. Whether it can regain its safe-haven aura will depend on whether subsequent prices can recover the ground currently lost.