Gold has long been considered a safe haven asset—something investors and nations turn to when the world is in turmoil. One of the most significant events that triggers a surge in gold prices is war. Whether it's a regional conflict or a global war, gold often reacts sharply. But what exactly causes gold to spike during such times?

Let’s break it down.
 

1. Currency Instability in War Zones

During times of war, especially in countries directly involved in conflict, local currencies often collapse. Central banks may lose control, inflation spirals out of control, and trust in government-backed money deteriorates.

Examples from history:

• During the Syrian civil war, the Syrian pound lost over 90% of its value.

• The Ukrainian hryvnia depreciated significantly after the Crimea crisis and subsequent tensions with Russia.

• In World War II, European countries like Germany and Austria experienced hyperinflation post-conflict, forcing citizens to abandon paper money.

When a currency becomes virtually worthless, citizens and even governments rush to gold as a stable alternative.
 

2. Rising Inflation and Supply Chain Disruptions

War doesn't just affect one region—it ripples through global markets. Supply chains are disrupted, especially for commodities like oil, gas, and agricultural goods. This disruption often leads to:

• Higher production costs

• Scarcity of goods

• Spiking inflation

When inflation rises, the value of money erodes, and gold—being a non-yielding, inflation-resistant asset—gains demand.

Example: The Russia-Ukraine conflict in 2022 led to a surge in energy prices, which then caused global inflation to rise. As a result, gold prices shot up by over 10% in just a few weeks.
 

3. Difficulty in Liquidating Traditional Assets

During wartime, it becomes incredibly difficult to sell or access traditional financial assets like stocks, bonds, or real estate:

• Stock markets may crash or be suspended.

• Real estate markets stagnate or become illiquid.

• Cross-border payments may be blocked or restricted.

This pushes investors and civilians alike to convert their wealth into something globally recognized and easily tradable—gold.

Gold is:

• Portable

• Globally accepted

• Non-digital (cannot be frozen or hacked)

• Historically trusted
   

  4. Flight to Safety and Investor Sentiment

  Aside from direct war impacts, geopolitical tension breeds fear in the global financial markets. Institutional investors, hedge funds, and central banks often shift portfolios toward safe haven assets.

  Gold becomes the default safety net, leading to increased speculative and strategic buying.

  Even rumors or threats of war—without actual conflict—can cause gold to rally as a precautionary measure.
   

  5. Gold as a Universal Standard of Value

  Unlike currencies or stocks, gold isn't tied to a single economy. Its intrinsic value is recognized globally, making it a logical choice during international crises.

  During times of uncertainty, the logic is simple:  “When nothing else is safe, gold is.” This perception alone drives demand.
  
  Why War Makes Gold Shine

  War brings fear, uncertainty, and chaos—but for gold, it brings opportunity and demand. From collapsing currencies to inflation and broken financial systems, people and institutions turn to gold as a trusted store of value.

  At Onexar, we help traders and investors stay ahead of market movements. Whether you're watching geopolitical developments or managing portfolio risk, understanding gold's behavior during war can offer a strategic edge.
  
  Want to trade gold with tight spreads and lightning-fast execution?
  Start now with OneXar – Your Gateway to Global Markets.