In times of global crises, the price of gold shoots up as investors look at the yellow metal as a safe haven against inflation.

But that has not been the case this time.

Gold has been under pressure since the United States and Israel attacked Iran in late February, launching a months-long war. Prices have fallen from a high of $5,303 per troy ounce (31.1g) on January 28 to $4,235 on Friday.

That is because soaring inflation has raised concerns that central banks will not slash interest rates. They may even hike them to rein in prices.

The roots of the inflation spike lie, in large part, with the Strait of Hormuz.

To retaliate against the US and Israel, Iran has been blocking traffic through the waterway since the start of the war, impeding a major artery for oil and gas shipments. Energy prices have shot up in response, which in turn has pushed up inflation.

In the US, inflation is at its highest in three years, at 4.2 percent. At the same time, the country’s job market has held steady, dashing expectations of any immediate cuts to interest rates.

While gold acts as an inflation hedge for investors, the higher interest rates tend to weigh on the metal.

Gold, after all, is considered a “non-yielding” asset, as it does not generate income beyond its own worth. In other words, to profit from gold, the metal’s value has to increase.

“Gold is as close to real money as is possible in terms of an asset,” Justin Cardwell, head options analyst for the financial website OptionSpreaders.com, told Al Jazeera. “It doesn’t collect dividends, but it also doesn’t yield value till prices go up. People buy gold for its appreciation [in value].”

That puts interest rates in direct competition with gold.

“Gold loses its shininess as an investment if interest rates are high and people are going to pound into the dollar,” Cardwell added.

The Iran conflict has been positive for the dollar, and since gold is priced in dollars, the two move inversely.

“When the dollar strengthens, gold feels the pressure; when the dollar weakens, gold tends to climb. Right now, the dollar is strong, and gold is feeling it,” Collin Plume, CEO of Noble Gold Investments, told Al Jazeera in an email.

But Plume added that the future is uncertain for the value of both.

“The biggest question we’re dealing with for the rest of this year — and probably the next few — is what comes next,” he said.

“A few months ago, what came next was a rate cut, so prices were rising and assets were appreciating across the board. That’s changed. Now we’re facing headwinds, including the real potential of a rate increase. Any asset is affected by that shift, and gold is especially price-sensitive to interest rates.”

Prior to the war against Iran, President Donald Trump had lobbied for the Federal Reserve, the US’s central bank, to dramatically reduce interest rates.

But the CME FedWatch tool, which helps to predict how the Fed might adjust interest rates, now estimates that the likelihood of a rate hike by December is more than 50 percent.

That is likely to influence the value of gold, according to Plume.

“Interest rates and inflation as two sides of a seesaw … and gold sits right in the middle of that,” said Plume. “The catch in 2026 is that both are happening at once — and right now, the rate side is winning. That’s why gold is facing headwinds.”

On Friday, as the news of a potential deal between the US and Iran broke, gold closed slightly higher than on the previous day.

“Headlines of the possibility of the war coming to close would be positive for gold because the assumption is that inflation will come down,” said Cardwell.

But that process would still take several months.

“This range that gold’s currently in, it’s very likely this is a place of support. Even when the war ends, there are so many other factors that will keep a lid on what gold prices can do,” Cardwell added.