The Iran war has punished the market's traditional safe havens, with the U.S. dollar the only old-school refuge left standing. Gold has dropped 21.2% since fighting began on Feb. 28, while bitcoin fell 6.1% and a benchmark utilities fund lost 5.4%. Surging energy prices and inflation drove the reversal.
The U.S. dollar has become the only traditional haven to hold firm through the Iran war, as gold, bitcoin, treasuries and utilities all buckled under the strain. The dollar has risen 3.2% since the U.S. launched its first attacks on Feb. 28, according to Barron's.
Investors who followed the well-worn paths to safety were burned instead. The conflict triggered a prolonged blockade of the Strait of Hormuz, which handles roughly 20% of the world's petroleum. That energy shock sent oil prices higher and fed U.S. inflation.
Gold and bitcoin lose their shine
Gold is possibly the biggest disappointment. The precious metal dropped 21.2% since the war began, according to FactSet. Because gold pays no yield, higher interest rates raise the opportunity cost of holding it — and the Federal Reserve held rates steady rather than cutting as investors had expected for 2026, signaling potential hikes.
Bitcoin, once hyped as "digital gold," fared little better. The cryptocurrency fell 6.1% since Feb. 28 and is down almost 30% so far this year. Rather than a safe port, it behaved like a speculative tech stock — and it lost capital to investors chasing the artificial-intelligence trade and chip makers such as Nvidia. The comparison between the two assets underscores how differently each behaves under stress, a theme explored in this look at gold versus bitcoin.
Bonds and utilities buckle too
Treasuries offered no refuge. Instead of the usual crisis rally, bond prices fell and the 10-year treasury yield spiked to around 4.49% as rising inflation ate into fixed payments. Only the short end helped: 3-month Treasury bills guaranteed a return of nearly 5% without the price-volatility risk of longer debt.
Utilities also failed to shelter investors. The Utilities Select Sector SPDR Fund fell 5.4% since the war began, hit by soaring wholesale gas costs and higher refinancing bills on its heavy corporate debt.
Why the dollar won
The greenback flourished while the rest were crushed. The U.S. Dollar Index marched to a 13-month high of 101.80, lifted by the energy shock. With global oil, LNG and commodities still priced in dollars, spiking energy bills forced foreign governments and corporations to buy vastly more of the currency, creating structural demand that pushed its value up.
Source: Barron's
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