Considering its traditional position as a ‘safe haven’ asset and hedge against various risks, Gold performed somewhat surprisingly during March as the commodity declined more than 13% as the Iran war started and expanded.
Despite the downturn and the last, April 1 and 2 drop driven by President Donald Trump’s latest televised address, top U.S. economist Peter Schiff opined in a late Wednesday X post that the yellow metal is about to reverse.
Specifically, the expert stated that gold ‘will break this trend and rally in tandem with oil’ in reference to both the commodity’s decline and the fossil fuel upsurge.
Notably, West Texas and Brent crude, as well as energy companies, have been major winners of the ongoing conflict in terms of barrel and stock prices. WTI, for example, is up roughly 41% in the 30-day chart while Brent rose approximately 38%.
Similarly, the overall S&P 500 stock market index is down 4.45% in the same timeframe, while the section tracking energy equities is up 4%.
Gold next rally could last through 2026 if Schiff is proven correct
Should Peter Schiff’s prediction prove correct, gold might soon enter a rally that could see it fly higher for a protracted period. While news coming from the Trump Administration has been contradictory at best – by April 1, the President’s rhetoric appeared deescalatory leading to a significant rally for non-energy sectors – the latest address indicates warfare will only intensify.
Given that the Pentagon’s actions by press time on April 2 signal an inability to open the Strait of Hormuz and the commander-in-chief’s statements hint at an unwillingness to tackle the disruption in the critical waterway, it is possible that the supply chain issues will persist through 2026.
Additionally, considering that Iran has been repeatedly claiming that it is not looking for a ceasefire and that any peace agreement would have to include Lebanon, and that Israel is allegedly looking to exclude its northern neighbour from negotiations, there appears to be no off-ramp for the time being.
Circling back to Peter Schiff, his X post predicting a gold rally also appears to forecast a protracted war and continued decline across most sectors and assets.
Per the economist’s comments, the conflict is in a re-escalation phase despite the allegation that the U.S. ‘already achieved the most glorious and brilliant victory in the history of war’ – a jab at the numerous victory declarations published by President Trump since early March.
Why Gold might not reverse the recent downtrend
Elsewhere, it is noteworthy that Schiff’s prediction regarding gold breaking the downtrend is far from guaranteed to come true. The economist is a known ‘gold bug’ and has been bullish on the commodity under most circumstances.
While he has, so far, proven correct barring the latest downturn, and the yellow metal has been a top-performing asset through much of the XXI century and especially in the last five years, precisely this rally might have damaged its ‘safe haven’ status and turned it more risk-sensitive.
Another theory as to why gold is unlikely to reverse was shared by a different Wall Street expert: the prominent Tesla (NASDAQ: TSLA) bear, Gordon Johnson of GLJ Research.
According to the analyst, the yellow metal’s choppy performance is due to the widespread decline triggered by the Iran war. Late on April 1, Johnson published a simple X post describing the relationship:
Sure… war => more risk => lower asset values => need access to physical dollars to settle margin calls => sell EVERYTHING (incl. gold).
Should the GLJ Research analyst prove correct, gold will not manage a trend reversal until either the ongoing correction turns significantly more severe, or there is a widespread market recovery halting the margin calls.
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