Gold, Oil, & Your Portfolio

You may have noticed something strange lately: gold prices have fallen sharply even as the Middle East conflict has intensified. Normally, war drives gold up. So, what’s going on?

The short answer is oil.

The Oil-Gold Connection

The Iran war has disrupted oil flows in one of the world’s most critical regions. Countries like Turkey and several Gulf states rely heavily on imported energy, and they pay for that oil in US dollars. With oil prices spiking, their dollar bills have skyrocketed. At the same time, their oil exports (and therefore their dollar income) have dropped.

That leaves them in a tight spot.

To get the dollars they urgently need — for food, military spending, and to keep their currencies stable — these countries are being forced to sell gold. Not because they want to, but because they have no other choice.

For example, Turkey reportedly liquidated around 58 tons of gold in just two weeks. There are also strong indications that other countries may be quietly selling gold reserves to raise liquidity. This kind of forced selling is a major reason why gold has dropped so sharply from its peak.

Russia’s Gold Export Restrictions

And there’s another important factor developing in the background.

Russia, the world’s second-largest gold producer, is introducing new restrictions on gold exports. From May 1, individuals will be limited to taking just 100 grams of gold out of the country, as part of a broader effort to clamp down on capital flight and the shadow economy.

What Does This Mean for the Gold Price?

In the short term, it could add further downward pressure. With the new rules coming into effect soon, there may be a rush to sell gold before the deadline, increasing supply in the market at exactly the wrong time.

So over the next few weeks, we could continue to see volatility and even further weakness in the gold price.

But this is where the longer-term picture becomes important.

Once the immediate pressures of the war ease, the dynamic is likely to reverse. Central banks and governments that have been forced to sell gold will need to rebuild their reserves. At the same time, structural drivers like high global debt, persistent inflation, and currency uncertainty remain firmly in place.

That combination — reduced forced selling and renewed institutional buying — has historically led to strong bull runs in gold.

What Does This Mean for You?

If you have exposure to gold — whether through physical gold, gold ETFs, or mining shares — this volatility cuts both ways. In the short term, prices may remain under pressure. But for long-term investors, periods like this have often created attractive entry points.

In simple terms: gold may be under pressure now, but it could be setting up for its next major move higher.