New Delhi, May 14 -- Gold may be a "barbarous relic," as John Maynard Keynes once observed, but it remains the relic of choice among central banks. Emerging-market central banks have been loading up on gold reserves ever since the 2008 global financial crisis, more than doubling their holdings. Does the anomalous behaviour of gold prices since the outbreak of the war with Iran call this strategy into question, or is something else going on?

Gold's allure derives from its reputation as a safe haven and inflation hedge. Yet in March, following the start of the war, an event that should have supported demand for gold on both grounds, its dollar price fell by 10%. Prices then remained flat in April. Evidently gold is not quite the safe haven...