Gold prices tumbled as much as 2.2% toward $4,000 an ounce after the US and Iran agreed to halt tit-for-tat strikes, easing fears of a broader conflict that had fueled global inflation. The metal pared losses after President Donald Trump confirmed peace talks will resume in Doha on Tuesday. Gold has now dropped more than 23% since the war began in late February, briefly dipping below $4,000 last week.
The war-driven spike in energy prices had raised expectations that central banks would keep interest rates higher for longer, a negative for non-yielding bullion. Oil prices nudged higher on Monday, but gold's ability to hold above $4,000 despite renewed tensions suggests dip buyers are defending that level. Analyst Justin Lin of Global X ETFs Australia noted that gold is becoming more resilient to Middle East volatility, especially after erasing year-to-date gains and fast-money investors largely exiting.
The latest developments come on the heels of US inflation data that, while high, fell within analyst estimates. Federal Reserve Bank of Richmond President Tom Barkin warned inflation remains too high but sees tentative signs of moderation ahead. Spot gold settled at $4,026.65 an ounce, with silver and platinum slipping while palladium gained, as the Bloomberg Dollar Spot Index held steady.
What to watch next: Whether the Doha talks produce a lasting ceasefire or renewed hostilities, and how the Fed's next inflation reading influences rate-cut expectations and gold's trajectory.
Key Takeaways
- Gold dropped sharply after US-Iran de-escalation, but held above $4,000 as dip buyers re-emerged.
- The metal has lost over 23% since the war began, with higher-for-longer interest rates weighing on bullion.
- Peace talks in Doha are the next critical catalyst for gold and broader risk sentiment.
- Fed officials see tentative inflation moderation, but remain cautious about rate cuts.
Insights & Analysis
- Gold's resilience at $4,000 suggests the market is pricing in a lower geopolitical risk premium, shifting focus back to monetary policy.
- If Doha talks fail, gold could spike on renewed safe-haven demand, but sustained gains require a dovish Fed pivot.