Gold Between Safe Haven and Liquidity: Impact of the February Shock on Global Markets

The World Gold Council’s Q1 2026 report, released Wednesday, April 29, reveals a paradox in the precious metal's performance. Despite spot gold hitting a historic all-time high of nearly $5,600 per ounce in January, overall investment volume fell by 5%. This decline was primarily driven by a "liquidity crunch" following the outbreak of hostilities on February 28 and the subsequent closure of the Strait of Hormuz, forcing institutional investors to liquidate gold holdings to settle margins in volatile energy and equity markets.

Record Prices vs. Jewelry Slump Gold averaged $4,873 per ounce during the quarter, supported by a weakening dollar and the unpredictable monetary policies of the Trump administration. However, these record-breaking prices, combined with logistics disruptions in the Middle East—a global hub for bullion shipping—have severely impacted the jewelry sector. The value of purchases surged by 62%, but the physical volume decreased as consumers were priced out of the market.

Outlook Amid the Hormuz Blockade WGC analysts suggest that the heavy outflows from Gold ETFs in March were tactical maneuvers for cash rather than a loss of faith in the metal. With the energy crisis driving global inflation and the Federal Reserve signaling further rate hikes, gold’s status as a defensive asset remains robust. Experts anticipate a resurgence in demand once the immediate scramble for liquidity subsides and the long-term reality of a restricted global energy supply sets in.