Gold mining stocks have exhibited unusual behavior amid ongoing geopolitical tensions in the Middle East and rising inflation concerns, confounding their traditional role as safe-haven assets. Following a period of strong gains driven by record bullion prices, investor confidence in the sector has waned since the conflict between the United States and Iran escalated in early 2026.

Brian Laks, chief investment officer at Old West Investment Management, described the shift as a fundamental change in the nature of gold investing. After more than a decade of viewing gold stocks as a stable hedge against market volatility, Laks and other asset managers have scaled back their holdings, citing the sector’s recent unpredictable performance and meme-stock-like trading patterns. Hedge funds such as Tuttle Capital Management and Purpose Investments have also reduced their exposure to gold and silver assets, reallocating capital toward sectors perceived as less vulnerable to disruption, including utilities and energy.

Since late February, the NYSE index tracking gold miners has fallen roughly 31%, in stark contrast to an 8% gain in the S&P 500 over the same period. This divergence comes despite the ongoing conflict’s capacity to stoke market uncertainty, a scenario that would historically bolster gold’s appeal. The volatility was particularly evident in one trading week when gold miner shares dropped nearly 5% following U.S. President Donald Trump’s initial threat to resume strikes against Iran, only to recover sharply after he called off airstrikes citing progress in peace talks. Further reports suggesting movement toward an interim U.S.-Iran peace agreement led to additional gains by the end of the week.

The underlying factors weighing on gold stocks include rising energy prices, which increase production costs for miners, and inflation fears that have pressured expectations for Federal Reserve interest rate hikes. Higher rates typically reduce the attractiveness of non-yielding assets like gold. Some investors now approach gold-related equities as tools for speculating on short-term monetary policy rather than as stable stores of value. Gabelli Gold Fund’s associate portfolio manager Chris Mancini noted that his firm has seen little net flow into its gold holdings over recent months, indicating market participants are largely waiting on developments.

At the start of the year, Tuttle Capital allocated about 15% of its actively managed fund to precious metals-related stocks but trimmed that to 5% amid the conflict. The firm has simultaneously increased exposure to energy and utilities sectors by approximately five percentage points, seeking investments with low risk of disruption from emerging technologies such as artificial intelligence. Old West has shifted focus toward copper and natural gas, commodities benefiting from AI-driven demand in data center infrastructure, according to Laks. Purpose Investments has maintained positions in major low-cost miners such as Barrick Mining but moved toward utility stocks for stability.

The gold sector’s transformation into a more speculative, “risk-on” asset began in 2025, as a weakening dollar and rising central bank purchases fueled a rapid price surge. Gold’s price jumped 65% last year, while shares of leading miners—including Newmont Corp, Barrick Mining Corp, and Agnico Eagle Mines Ltd—more than doubled, marking the largest annual increase on record.

Despite the current turbulence, some market participants remain cautiously optimistic that gold’s traditional defensive characteristics will reassert themselves once geopolitical and inflation-related uncertainties subside. VanEck Gold Miners ETF product manager Andrew Musgraves suggested that after the recent period of volatility and corrections, investors may eventually return to gold mining stocks as a reliable portfolio diversifier.

For now, however, industry insiders acknowledge that investing in gold requires a contrarian mindset amid a market environment marked by rapid shifts and heightened sensitivity to both political developments and macroeconomic policy signals.