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Gold in Times of War: Balance in the Middle of Chaos

Updated: May 3

Throughout history, international conflicts have had a direct impact on the price of gold. Here are a few examples of how geopolitical and economic instability have impacted the price of gold.


two soldiers in the field
War conflicts have had a direct impact on the price of gold.

World War II (1939-1945)


During the second world war, the price of gold experienced a notable increase. With the outbreak of war, the demand for gold increased significantly as it was perceived as a safe haven in times of crisis. Countries fighting in World War 2, such as the United States and the United Kingdom, accumulated large gold reserves to support their currencies and stabilize their economies. This increase in demand for gold drove its price upward.


As war progressed, the Allies gained ground, their confidence in economic stability strengthened, and the price of gold, although fluctuating, experienced a certain degree of moderation. In general, the price of gold during this period was deeply influenced by the dynamics of war, the demand for safe havens, and the efforts of countries in conflict to stabilize their economies. The price of an ounce of gold in 1939 was $35 dollars, while in 1945 the average price was $37 dollars.


Cold War (1947-1991)


In general, during the Cold War, tensions between the United States and the Soviet Union created a climate of global distrust. Both blocks were aware of the importance of gold, and therefore accumulated large reserves to support their respective currencies. This projected an image of financial strength for both blocks. This period contributed to keeping the price of gold high, since the persistent demand was maintained in the midst of ideological and military competition.


When analyzing this long period in greater detail, we see that during the 1940s and 1950s, the economic stability that immediately followed the end of World War II led to a relative calm in the price of gold.


However, during the 1970s, geopolitical tensions, such as the oil crisis and inflation, contributed to a significant increase in the price of gold. The 1980s were characterized by restrictive monetary policies and economic stability, which together with the end of the Cold War in 1991, stabilized the price of gold.


The price of an ounce of gold surged from $39 dollars in the seventies, up to $417 dollars in the eighties, stabilizing in the nineties with an average price of $383 dollars per ounce.

Gulf War (1990-1991)


Iraq's invasion of Kuwait in 1990 sparked the Gulf War and had an important impact on the price of gold. Uncertainty over oil supplies and instability in the Middle East generated an increase in the demand for gold as a safe haven. Nevertheless, as the situation stabilized, prices experienced a decline, demonstrating the temporary volatility that conflicts can exert on the gold market. Hence the price of an ounce of gold went from $386 dollars in 1990 to $362 dollars in 1991.


Afghanistan War (2001-2014)


This conflict triggered by the attacks in New York on September 11, 2001, also left its mark on the price of gold. Geopolitical uncertainty and global security concerns led to a surge in the demand for gold as a protection.


During this period, the price of an ounce of gold registered an exponential increase, in 2001 it traded at $271 dollars, and in 2014 its average price was $1,180 dollars.


Trade War between the United States and China (2018-present)


China and US currencies
Trade war between the United States and China

The trade war between the United States and China has had a direct impact on the price of the golden metal. Economic tensions and trade disputes have raised concerns about global economic growth, leading investors to seek refuge in a safe asset like gold


The average price of an ounce of $1,649 dollars reflects how economic antagonisms can have effects similar to war conflicts on the price of this precious metal.


Ukraine and Gaza (2021 - ?)


Recently, the wars in Ukraine and Gaza have become part of history defined by conflict and instability and have accordingly affected the price of gold. This is how the price of an ounce of gold  increased from $1,828 in 2021 to over $2,150 in the first quarter of 2024.


Either as a safe haven in times of crisis or as a protective asset against the volatility of financial markets, gold is an oasis of stability in the face of war and economic conflicts, helping its holders to preserve the balance in the midst of chaos.


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