New Delhi, April 7 -- Which asset class tends to rise during heightened geopolitical risks, full-scale wars, and rising inflation? The usual short answer: gold, because investors avoid equities when macroeconomic risks are high and rush to safe-haven assets like gold.

But this is not happening this time. While the raging war in West Asia has raised macroeconomic risks, gold prices have corrected significantly. As per MCX data, domestic spot gold prices have declined more than 6% since the US-Iran war started on February 28.

The decline in gold prices has occurred due to the jump in the US dollar amid rising crude oil prices. Crude is mostly traded in the US dollar, so a rise in the commodity prices drives demand for the dollar, conseque...