Analysts: The Iran war will have a limited impact on gold prices; the focus is on the independence of the Federal Reserve.
2026-03-11 14:41:05
Rhona O'Connell, Head of Precious Metals Market Analysis at StoneX, stated in a recent StoneX panel discussion that gold's multi-year rally has been driven more by structural uncertainty than by pure inflation. The geopolitical premium from the Iran war has been largely priced in by the market, and the biggest downside risk currently facing gold prices lies in the potential challenge to the Federal Reserve's independence.
When asked about the potential direction of gold prices in the current geopolitical environment, Rhona O'Connell stated, "It all comes down to uncertainty." Historically, gold has been considered the ultimate hedge against inflation. However, for professional investors today, Treasury Inflation-Protected Securities (TIPS) are far more effective inflation hedges than gold.
She added that gold prices only surpassed the 1980 high in real value when they broke through $3,700 last year, so gold actually underperformed in terms of inflation when priced in major currencies.
She emphasized that uncertainty has become a key reason for investors' preference for gold. This uncertainty encompasses a variety of factors, the most important of which is geopolitics, including not only armed conflict but also trade policies such as tariffs. She pointed out that much of the uncertainty stems from the top levels of the US government. She said, "As we speak now, it's impossible for us to know what policies the White House will introduce in the next 48 hours, let alone the next four months."
She added that she believes Trump is well aware of the delicate balance in Congress and the need to maintain policy consistency in order to build investor confidence for the midterm elections.
Rhona O'Connell points out that, relatively speaking, the recent wars in the Middle East have had a rather limited impact on gold prices. She says, "The Iranian shock itself only pushed gold prices up by about $300. On a $5,000 base, this is actually very little, and the rise was short-lived because geopolitical tensions have already been largely priced in by the market."
She stated that over the past 18 months or so, a large number of retail and professional investors have been waiting for price pullbacks to find value buying opportunities. When a $200 or $300 pullback did not materialize, many ultimately chose to capitulate and enter the market. She believes that while the current market is not overcrowded, it is approaching "critical mass."
She emphasized that when examining gold, it is essential to distinguish between price and value. She stated, "They are two entirely different things. Gold consistently maintains its value, while its price is another matter entirely."
Rhona O'Connell stated that at current price levels, aside from armed conflict, the most significant downside risk to gold prices lies in the independence of the Federal Reserve.
She specifically mentioned the Supreme Court's ruling in the Lisa Cook case. "For me, the key is the Supreme Court's decision in the Lisa Cook case. It's not primarily about the balance of power within the Federal Reserve—we've said before that the Fed is not a kingdom, but a council. More importantly, it's about the separation of powers, a cornerstone of the U.S. Constitution. If the Supreme Court supports the president's or government's appeal, it will blur those boundaries, raising concerns about monetary policy and its stability. This could have a significant impact on the Treasury market."
She added, " If I had to pick one element I'm particularly focused on, I would focus all my attention on this one ."
As early as March 3, Rhona O'Connell wrote that the outbreak of the Iran war, new uncertainties surrounding Trump's tariffs, and higher-than-expected US inflation were all theoretically favorable for gold and silver prices, but both metals showed signs of being overbought and needed a correction. She observed that there was no significant oversupply of speculative positions in either metal on exchanges, reflecting profit-taking in silver in January and continued liquidation on COMEX.
She wrote: "This can be interpreted in two ways: first, there is less room for selling than before; second, market participants believe the rally has been excessive. The answer is likely both. Gold is at the top of its uptrend, with the Relative Strength Index (RSI) near 70. Silver is at a Fibonacci retracement level after a significant correction. Overall, gold and silver may have risen enough in the short term and need to digest overbought conditions, but downside is limited. Unless geopolitical tensions escalate further, now is the time for a breather."
Rhona O'Connell concluded that the strength of gold and silver should continue in the current highly tense atmosphere until the situation stabilizes. Until then, the market will remain in risk-averse mode.
Overall, StoneX analysts believe the core driver of the gold bull market has shifted from traditional inflation hedging to broader structural uncertainties, including geopolitical risks, tariff policies, and institutional independence risks. With the geopolitical premium from the Iran war largely priced in, gold prices may face a short-term technical correction, but long-term support remains strong.
Investors should pay close attention to judicial developments related to the Federal Reserve's independence and the Supreme Court's rulings on related cases, as these could become key variables affecting the stability of gold and the entire financial market. In an environment dominated by uncertainty, gold's appeal as a safe-haven asset is expected to continue, but potential policy and judicial shocks should be heeded.
Spot gold daily chart source: EasyForex
At 14:40 Beijing time on March 11, spot gold was trading at $5201.41 per ounce.
Uncertainty becomes the core driving force of gold investment
When asked about the potential direction of gold prices in the current geopolitical environment, Rhona O'Connell stated, "It all comes down to uncertainty." Historically, gold has been considered the ultimate hedge against inflation. However, for professional investors today, Treasury Inflation-Protected Securities (TIPS) are far more effective inflation hedges than gold.
She added that gold prices only surpassed the 1980 high in real value when they broke through $3,700 last year, so gold actually underperformed in terms of inflation when priced in major currencies.
She emphasized that uncertainty has become a key reason for investors' preference for gold. This uncertainty encompasses a variety of factors, the most important of which is geopolitics, including not only armed conflict but also trade policies such as tariffs. She pointed out that much of the uncertainty stems from the top levels of the US government. She said, "As we speak now, it's impossible for us to know what policies the White House will introduce in the next 48 hours, let alone the next four months."
She added that she believes Trump is well aware of the delicate balance in Congress and the need to maintain policy consistency in order to build investor confidence for the midterm elections.
The war with Iran has had a limited impact on gold prices, as the premium has already been priced in.
Rhona O'Connell points out that, relatively speaking, the recent wars in the Middle East have had a rather limited impact on gold prices. She says, "The Iranian shock itself only pushed gold prices up by about $300. On a $5,000 base, this is actually very little, and the rise was short-lived because geopolitical tensions have already been largely priced in by the market."
She stated that over the past 18 months or so, a large number of retail and professional investors have been waiting for price pullbacks to find value buying opportunities. When a $200 or $300 pullback did not materialize, many ultimately chose to capitulate and enter the market. She believes that while the current market is not overcrowded, it is approaching "critical mass."
She emphasized that when examining gold, it is essential to distinguish between price and value. She stated, "They are two entirely different things. Gold consistently maintains its value, while its price is another matter entirely."
The Federal Reserve's independence poses the biggest downside risk to gold prices.
Rhona O'Connell stated that at current price levels, aside from armed conflict, the most significant downside risk to gold prices lies in the independence of the Federal Reserve.
She specifically mentioned the Supreme Court's ruling in the Lisa Cook case. "For me, the key is the Supreme Court's decision in the Lisa Cook case. It's not primarily about the balance of power within the Federal Reserve—we've said before that the Fed is not a kingdom, but a council. More importantly, it's about the separation of powers, a cornerstone of the U.S. Constitution. If the Supreme Court supports the president's or government's appeal, it will blur those boundaries, raising concerns about monetary policy and its stability. This could have a significant impact on the Treasury market."
She added, " If I had to pick one element I'm particularly focused on, I would focus all my attention on this one ."
Gold and silver prices are overheated in the short term and need to correct, but the downside is limited.
As early as March 3, Rhona O'Connell wrote that the outbreak of the Iran war, new uncertainties surrounding Trump's tariffs, and higher-than-expected US inflation were all theoretically favorable for gold and silver prices, but both metals showed signs of being overbought and needed a correction. She observed that there was no significant oversupply of speculative positions in either metal on exchanges, reflecting profit-taking in silver in January and continued liquidation on COMEX.
She wrote: "This can be interpreted in two ways: first, there is less room for selling than before; second, market participants believe the rally has been excessive. The answer is likely both. Gold is at the top of its uptrend, with the Relative Strength Index (RSI) near 70. Silver is at a Fibonacci retracement level after a significant correction. Overall, gold and silver may have risen enough in the short term and need to digest overbought conditions, but downside is limited. Unless geopolitical tensions escalate further, now is the time for a breather."
Overall Outlook: Uncertainty Supports Gold Prices to Remain Strong
Rhona O'Connell concluded that the strength of gold and silver should continue in the current highly tense atmosphere until the situation stabilizes. Until then, the market will remain in risk-averse mode.
Overall, StoneX analysts believe the core driver of the gold bull market has shifted from traditional inflation hedging to broader structural uncertainties, including geopolitical risks, tariff policies, and institutional independence risks. With the geopolitical premium from the Iran war largely priced in, gold prices may face a short-term technical correction, but long-term support remains strong.
Investors should pay close attention to judicial developments related to the Federal Reserve's independence and the Supreme Court's rulings on related cases, as these could become key variables affecting the stability of gold and the entire financial market. In an environment dominated by uncertainty, gold's appeal as a safe-haven asset is expected to continue, but potential policy and judicial shocks should be heeded.
Spot gold daily chart source: EasyForex
At 14:40 Beijing time on March 11, spot gold was trading at $5201.41 per ounce.
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