Gold prices unexpectedly fell in March despite escalating geopolitical tensions, raising questions among investors. Find out the reasons behind this drop and the strategic move by the Bank of France.
Key Points
- -9.7% in March, +9.7% in 2026
- Gold drops despite rising geopolitical risk
- Bank of France “repatriates” its gold from the US
- $527 billion per day exchange
-9.7% in March, +9.7% in 2026
By the end of March, the price of gold per ounce was 3,995.9 euros (4,608.35 $), marking a significant 9.7% decrease for the month. The 2026 performance was halved, with gold’s increase for 2026 reaching 9.7% by April 7.
The month of March was impacted by the Iran war, affecting all markets. The CAC 40 experienced a similar decline to gold: -8.9% for the month, but its 2026 performance excluding dividends went negative at -2.3%. Bitcoin, on the other hand, saw an almost 6% increase in March, but remained significantly down for 2026 at -20%.
Paradox: Gold drops despite rising geopolitical risk
It may seem surprising that gold, a traditional safe haven, would plummet amid an international geopolitical crisis.
Several explanations include:
- The rise in energy prices leading to inflation, causing central banks to increase interest rates. Expected rate hikes are unfavorable to gold, as unlike bonds, gold does not generate interest.
- Despite an overall decline in financial markets, gold, which had previously appreciated by almost 20%, faced profit-taking. A similar phenomenon was observed during the 2008 crisis, where gold, initially on the rise after the Lehman Brothers collapse, lost over 15% in a month due to liquidation. In the following months, the safe-haven asset recovered and gained more than 25% in 2009.
- High prices could slow down central bank purchases, with recent data showing 19 tons of net purchases in February, including notable buyers such as Poland (+20t), and China accumulating 5 tons of gold in March. However, the trend needs monitoring, as some countries may seek to profit from gold sales to fund temporary actions, such as Turkey selling gold to support its currency.
- Private demand, especially from India and China, may have eased. After the Chinese New Year (February 15-23), jewelry demand usually enters a seasonal low.
- Professional investors have shifted from gold to oil to hedge against pressing risks.
Most analysts have factored in this correction, revising short-term forecasts while maintaining a positive outlook in the medium term. This underscores gold’s role—it truly shines in the long run.
Bank of France “repatriates” gold from New York, records 12.8 billion euro profit
The Bank of France announced the repatriation of its 129 tonnes of gold held in New York. Instead of a complex logistical operation, the bank sold this gold on the American market and repurchased an equivalent amount in Europe. This also bypassed the political implications of an announcement of repatriation that could have been misunderstood by US authorities.
These transactions conducted between July 2025 and January 2026 resulted in a 12.8 billion euro profit. A technical gain since the bank repurchased an equivalent amount of gold…
However, this move allowed the Bank of France to show a positive result of 8.1 billion euros for 2025. Without this operation, the central bank would have been in the red. The other beneficiary is the French state, collecting 1.5 billion euros in corporate taxes.
$527 billion per day
This was the average daily gold exchange in March 2026, according to the World Gold Council, making it one of the most liquid assets globally. For comparison, it exchanges about 5 billion euros per day on the Paris stock exchange…
Disclaimer:
Gold prices can vary significantly up or down. The information provided in this document is not an investment recommendation, and readers are advised to seek professional advice for managing their savings.
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