- Gold fell as much as 0.9% to around $4,575 per ounce Monday, extending its second consecutive weekly decline and now down roughly 12% since the U.S.-Israeli war on Iran began in late February.
- Trump’s announcement of “Project Freedom” to guide ships through the Strait of Hormuz raised hopes of de-escalation, while his simultaneous skepticism of Iran’s 14-point peace proposal kept uncertainty elevated.
- Oil-driven inflation fears and a stronger dollar are triggering hawkish signals from major central banks globally, reducing the likelihood of near-term rate cuts — a headwind for non-yielding bullion.
- Longer-term buyers remain active: central banks added gold at the fastest pace in over a year in Q1, and Tether has extended a buying streak that makes it the largest known non-government holder of bullion in the world.
What Happened?
Gold slipped to $4,575 per ounce in early European trading Monday, following two straight weeks of losses that have erased roughly 12% of its value since the Middle East conflict erupted. The competing signals from the Iran situation are creating uncertainty that cuts both ways for the metal: Trump’s “Project Freedom” Hormuz plan offered a potential de-escalation pathway that reduced some safe-haven demand, while his skepticism of Iran’s 14-point peace proposal kept the conflict unresolved. Oil prices held elevated, and the resulting inflation pressures are prompting central banks globally to signal higher-for-longer rate postures — directly weighing on gold, which pays no yield. Spot gold settled at $4,577 as of mid-morning London; silver, platinum, and palladium all also declined.
Why It Matters?
Gold had been one of the clearest beneficiaries of the Iran war’s inflation and safe-haven dynamics, but the 12% pullback from its pre-war levels illustrates how quickly the calculus can shift when rate expectations move against it. The structural long-term bid, however, remains intact: central banks bought gold at the fastest quarterly pace in over a year during Q1, and Tether’s continued accumulation — now making it the largest known non-government holder globally — reflects persistent institutional and sovereign demand. The key near-term variable is whether the Iran situation resolves enough to allow central banks to pivot toward rate cuts, which would likely reignite gold’s rally.
What’s Next?
Traders are watching this week’s U.S. Treasury quarterly refunding announcement, a packed slate of Fed speakers, and Friday’s monthly jobs report for clues on the rate trajectory and fiscal deficit path — all directly relevant to gold’s near-term direction. A credible Iran cease-fire that meaningfully reduces oil prices could allow the Fed and other central banks to signal rate cuts, removing the biggest current headwind for bullion. Conversely, continued conflict escalation combined with persistent inflation could revive the safe-haven bid. Watch the $4,500 level as a near-term technical support floor.
Source: Bloomberg
