Gold Hasn’t Delivered During the Iran Crisis. What Investors Should Consider Instead

Joey FrenetteWed, April 1, 2026 at 1:05 PM UTC

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Gold has underperformed during the Iran war despite historically rallying during geopolitical crises, with the metal giving back gains as momentum investors exit and gold’s beta relative to the S&P 500 has risen to 0.70—its highest level in over five years—making it increasingly correlated with stock market declines.

Bitcoin and commodity plays like oil and gas are emerging as more effective portfolio hedges than gold during the current conflict, with Bitcoin proving surprisingly steady near $68,000 amid market-wide panic.

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Gold tends to shine in times of rising geopolitical fears, but not this time around, with the shiny yellow metal taking a huge hit, giving back much of the gains from the past year in the middle of the Iran war. Of course, just because gold tends to be a great bet, at least historically speaking, in times of war, while acting as an effective inflation hedge in other environments, doesn't mean that it's guaranteed to do its job well (or at all) come future black swans.

Either way, the setup for gold's underperformance seemed set when the metal came into the year after a euphoric 2025, driven by the so-called "debasement" trade among other bullish drivers. Now that momentum investors have thrown in the towel and gold's suitability as hedges against chaos is coming into question again, perhaps it's time to buy the correction. After all, gold was in need of a correction, and now that we've got one, investors might not wish to shy away from the asset.

Of course, it's hard to time the bottom of a commodity. While Tuesday's relief bounce (alongside the market) was encouraging, I do perceive the correlation between gold and the stock market of late might be a cause for concern, especially for investors looking for gold to do some more of the heavy lifting should the stock market correction turn into a bear market or something worse.

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You're not imagining it. Gold's beta has risen of late

Gold's beta is in the ballpark of 0.70 nowadays, which is quite high, especially when you consider it's been hovering between 0.15 and 0.50 for much of the past three years. Either way, it seems like gold has become more of a risk asset, but one that could have plenty of rewards on the way up. Indeed, you have to go back more than five years to see a climate where gold was this correlated to the S&P 500.

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In any case, my view is that gold is a great bet for the "debasement" trade, which, in many ways, still seems to be in play. That said, expect some bumps in the road and for the metal to have the odd down day when the rest of the markets are down. Perhaps the same panic sellers dumping stocks are also throwing in the towel on gold in times of panic.

Either way, I view the gold drop as a golden buying opportunity, provided investors can handle the higher beta moving forward. For everyone else who seeks greater stability and less beta, it's perhaps a better idea to consider diversifying beyond gold now that it's arguably broken its "promise" for this year by not acting as a steady rock amid surging investor fears.

Bonds, crypto, and commodities might be worth buying as well

Bonds have been a bit wobbly as well after a tough March, and while there's concern that the correlation between bonds and stocks could lead to heightened pain for the 60/40 investors out there, I still think that diversifying into bonds can be a wise move, especially if you think the Fed's likelier to cut than raise interest rates once the Iran war looks to conclude in the coming weeks.

As for crypto, it remains a risk-on asset, much like gold nowadays, but amid the Iran conflict, Bitcoin (CRYPTO:BTC) has actually proven its value in a portfolio. At just nort hfo $68,000, Bitcoin has been surprisingly steady amid a market-wide panic. And that could mean the cryptocurrency is sitting in gold's seat. For how much longer? Time will tell! Either way, I think adding a bit of Bitcoin makes a portfolio that much more resilient.

Finally, oil and gas plays were the real winners in the past several weeks. And while commodities can be unpredictable while doing no favors for a portfolio's beta when times are normal, they can really do heavy lifting when there's an unforeseen spike in oil prices. Whether it's a blockage in the Strait of Hormuz or something else, sometimes oil is the commodity that can really bail a portfolio out when conflict arises.

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Source: “AOL Money”