Gold Slips as Iran War Intensifies

Gold fell nearly 1% to around $4,450 per ounce on Monday, paring gains from the previous session as the Middle East conflict entered its fifth week with no clear resolution in sight. Hostilities in the region intensified as Iran-backed Houthi militants in Yemen joined the conflict, targeting Israel over the weekend. The militant group also has the capacity to launch strikes on vessels transiting the Red Sea and key Saudi Arabian energy infrastructure. Meanwhile, the US military is reportedly preparing for weeks of ground operations in Iran after additional troops arrived in the region. Gold remains down more than 15% from its March peak as the oil price shock stoked inflation concerns and reinforced expectations for interest rate hikes from major central banks. A reversal in central bank buying, which had previously supported gold’s rally, further weighed on prices as major economies boost liquidity to counter the economic impact of the Iran war.

Gold rose above $4,500 per ounce on Friday after a sharp decline in the previous session, as President Donald Trump pushed back his deadline for Iran to secure a deal to end the war. Trump pledged to refrain from targeting Iranian energy facilities until April 6, providing some relief to markets unsettled by nearly a month of hostilities. He also said Iran had allowed 10 oil tankers to pass through the Strait of Hormuz this week as a “present” to the US. Meanwhile, Iran confirmed it had rejected the US’ 15-point plan to end the war and submitted its own conditions, including recognition of Tehran’s authority over Hormuz. On Thursday, gold dropped nearly 3% amid persistent doubts that the US and Iran can reach a ceasefire agreement any time soon. Gold and other metals came under heavy selling pressure as the Middle East conflict and surging energy prices fueled inflation concerns and raised expectations that major central banks could hike interest rates this year.

Gold prices fell nearly 2% on Thursday, trading around $4,460 per ounce and nearing their lowest level since early January, as escalating US-Iran tensions pushed crude prices higher, reigniting inflation concerns and prompting investors to abandon hopes for US interest rate cuts this year. Iran reiterated its denial of ongoing negotiations with Washington, while President Donald Trump stated that Iran is "begging" to make a deal, though he questioned whether the US is "willing" to strike one now. The uncertainty drove the US dollar and Treasury yields higher, with markets now assigning a 38% probability of a rate hike by December and a 93% chance of unchanged rates at the Federal Reserve’s April meeting. Just 3% of traders expect a rate cut in December, a sharp reversal from pre-conflict expectations of at least two cuts in 2026.