Dalio Calls for Raising Gold Holdings to 15%. Gold Prices Fell Over 10% Since U.S.-Iran War; Why Should Gold Holdings Still Be Increased?

TradingKey - The US-Iran war has entered its ninth week, and Bridgewater Associates founder Ray Dalio is calling on investors to increase their gold holdings to 5%-15% of their portfolios, as global uncertainty has risen significantly.

Spot gold prices have fallen by more than 10% since the outbreak of the war. Compared to a gain of nearly 70% throughout last year, gold has risen only 5% year-to-date. Why, against this backdrop, does Dalio remain bullish on gold's performance?

De-dollarization Accelerates: Gold Ushers in a "Golden Age"

Despite gold's sustained decline since the start of the war, Dalio believes the current macro environment is favorable for the metal, citing the core reason that "transactions outside the dollar system are increasing." He stated that the recent rise in international transaction volumes settled in yuan, the use of sanctions by the U.S. to influence the global financial system, and changing global trade patterns are all eroding the dollar's dominance, which is helping to fuel gold's rally.

The U.S. Dollar Index fell nearly 10% throughout 2025 and hit a four-year low earlier this year, indicating that the de-dollarization trend is intensifying. However, amid the shock of the U.S.-Iran war, the dollar has once again become the market's preferred safe haven, putting pressure on gold prices and causing them to drop below $4,600.

Stagflation, AI, and Macro-Cycles: Why Choose Gold

Dalio pointed out that since the outbreak of the U.S.-Iran war, the S&P 500 has maintained its rally, gaining nearly 4%, which shows that U.S. corporate earnings remain robust. At the same time, however, oil prices have surged due to the war, leading to a situation where rising inflation and a weakening labor market coexist—a classic phenomenon of stagflation.

This economic environment, coupled with the shift toward a multipolar world and the sweeping tide of AI, forms a complex social backdrop that is difficult for ordinary people to evade. Dalio believes that while AI facilitates economic and social progress, it is highly likely to widen the already vast wealth gap, further exacerbating social conflicts.

In the interview, Dalio used his "Big Cycle" theory to explain the changes taking place in the world today. He believes we are already in a relatively late stage, characterized by high debt levels and intensifying internal tensions, a phase that often triggers a significant restructuring of economic and political systems. During this period, investors should learn to diversify, avoiding the concentration of too much capital in a single asset class or market. Gold will act as a hedge when traditional financial assets experience high volatility.

Gold Linked to Oil Prices; Uncertain Outlook for the Strait of Hormuz

One of the world's most significant uncertainties currently is the openness of the Strait of Hormuz, a factor that influences gold prices by directly impacting oil prices and subsequently transmitting to inflation. Ole Hansen, Head of Commodity Strategy at Saxo Bank, also stated that the current weakness in the precious metals market is not due to geopolitical volatility, but rather inflationary risks triggered by rising crude oil prices. He noted that the overall trajectory of precious metals at this stage completely follows the energy market.

However, it remains difficult to determine the prospects for a US-Iran war and the Strait of Hormuz. US-Iran negotiations originally scheduled for last weekend in Pakistan did not proceed as planned, and latest reports indicate that Trump has instructed aides to prepare for a long-term blockade of Iran, which could keep the Strait of Hormuz closed. Yet, given the domestic political pressure Trump faces, he may likely soften his stance toward Iran again. Ray Dalio stated that while the U.S. wishes to exit this conflict as a victor, the window for U.S. decision-making is running out.

Hansen believes that while gold's current performance is subdued, the long-term structural trend remains unchanged, and the structural drivers supporting gold's strength remain solid.