Debt, not war, is the real driver of gold prices, says World Gold Council’s David Tait

Global debt levels, rather than geopolitical tensions, remain the primary force shaping gold prices, according to World Gold Council’s CEO David Tait, who said recent market behaviour reinforces the metal’s long-term fundamentals.

Speaking to CNBC-TV18, Tait said the recent volatility in gold during the West Asia conflict should not be misread as a breakdown of its safe-haven role. “Gold reacts more to the absolute fundamentals underlying an economy than to short-term impacts such as tariffs or even wars,” he said.

His comments come amid one of the most severe geopolitical escalations in decades, following coordinated US-Israeli strikes on Iran on February 28, 2026. The conflict has disrupted global energy markets, with the closure of the Strait of Hormuz and damage to key infrastructure pushing crude prices up by as much as 120% in some cases. The fallout has extended beyond oil, threatening supply chains in metals such as aluminium, where West Asia accounts for nearly 10% of global output.

Despite the turmoil, gold prices fell 13% in March, while silver dropped 23%, as investors shifted capital into energy markets and liquidated positions to cover losses in other asset classes. Tait said such moves are typical during periods of extreme stress. “It is only natural for people to sell the most lucrative winner in their portfolio… to compensate for margin calls or simply to take something off the table,” he said.

He noted that gold’s correction from its peak levels of around $5,500–$5,600 per ounce to the current range near $4,700–$4,800 per ounce was consistent with past patterns. “The fact that gold is still holding just under $5,000 per ounce, given the circumstances, suggests that people are beginning to understand the sheer global cost of this war and its implications for debt,” he added.

According to Tait, the key driver remains the growing burden of global debt, exacerbated by rising fiscal spending, weaker growth and persistent inflationary pressures. He argued that the economic consequences of the conflict—rather than the conflict itself—are what ultimately support gold prices. “There are two more weeks of uncertainty, two more weeks of cost… the amount of cost being added to global debt levels… will further undermine fiat currencies and support the case for gold,” he said.

Tait also pointed to structural concerns around fiscal stability, particularly in major economies, as a long-term bullish factor. “Nothing I’ve seen over the past year… gives me confidence in global fiscal stability,” he said, adding that gold has a “better chance than not” of moving higher and potentially reaching new highs.

On demand trends, he said physical investment in bars and coins is likely to remain robust as investors increasingly view gold as a hedge and portfolio diversifier. Jewellery demand, particularly in key markets such as India, could adjust to higher prices over time, while exchange-traded fund flows are expected to remain volatile due to their more speculative nature.

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Tait maintained that investors should focus less on geopolitical headlines and more on underlying macroeconomic conditions. “The biggest decline in gold came during a fiscal policy shift—those are the moments to watch. Not wars or tariffs… just blips in the broader gold landscape,” he said.

Overall, he reiterated that while short-term price movements may reflect market stress and liquidity needs, the long-term trajectory for gold will continue to be dictated by debt dynamics and the health of global finances.