By: Rhona O'Connell, Head of Market Analysis
As of March 2026, gold prices have retreated despite escalating conflict in the Middle East, highlighting the dominance of liquidity stress over traditional safe-haven flows. Gold initially rallied through 5400 as tensions intensified, yet the subsequent equity market rout triggered a reversal in bullion. This shift underscores how cross asset volatility can distort short-term price behavior. The result is a market dynamic where gold weakness reflects cash needs rather than fading geopolitical risk.
Rhona O'Connell, Head of Market Analysis at StoneX, has decades of experience tracking precious metals cycles across Asia and global bullion hubs. Her direct oversight of physical gold flows between Dubai, India, and major refining centers gives her a uniquely informed view of how financial market stress translates into bullion price action.
Gold spot prices weakened as equity markets came under sharp pressure, demonstrating how liquidity demands can override safe-haven behavior. Rhona O'Connell explains that "the rout in the equities markets has meant that people have been selling gold in order to raise cash against potential margin calls", confirming that bullion was used as a source of liquidity. Consequently, gold selling in this phase reflects collateral management rather than deteriorating fundamentals. Investors typically liquidate highly liquid assets first, and gold’s depth makes it a practical instrument for raising immediate cash.
Gold market structure continues to function even as prices fluctuate, reinforcing that this episode is liquidity driven rather than structural. O'Connell notes that "the spot price, loco London carries on regardless", indicating that benchmark pricing remains stable despite regional disruption. As a result, the recent pullback does not signal a collapse in global physical demand. Once equity volatility stabilizes and margin pressures ease, gold can resume trading more directly on geopolitical uncertainty and macro risk sentiment.
Gold often declines during equity turmoil because investors sell liquid holdings to meet margin calls. This liquidity driven behavior can temporarily outweigh safe haven demand.
No. The selling was largely tied to equity related cash needs, while the underlying loco London spot market continued to function normally.
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--- Written by Lindo Xulu, StoneX TV Journalist
--- Expert: Rhona O'Connell, StoneX Head of Market Analysis, EMEA & Asia
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