Gold prices recovered some of their earlier losses after U.S. President Donald Trump said Washington had held “good and productive” discussions with Iran and decided to delay any planned strikes against Iranian power plants and energy infrastructure for five days.
The move follows warnings from Tehran that it would attack Israeli power facilities and infrastructure supporting U.S. bases across the Gulf if its own energy network were targeted. Earlier in the day, gold had fallen sharply, effectively erasing most of the metal’s gains for the year.
However, Iran’s Fars news agency reported — citing a source — that there had been no direct or indirect communication with the United States, contradicting Trump’s claim that the talks with Tehran had been “productive.”
Events over the weekend had already raised the risk of escalation. Trump issued a 48-hour ultimatum demanding that Iran reopen the Strait of Hormuz, while Tehran warned it would retaliate if the threat were carried out.
Spot gold was down 3.1% at $4,352.5 per ounce by 08:03 ET (12:03 GMT), while gold futures slipped 4.7% to $4,388.29 per ounce. Earlier in the session, spot prices had touched their lowest level since late December.
Spot silver declined 1% to $67.16 per ounce.
“Keep in mind that even if fighting ended right now, the economic fallout from the last several weeks will still be substantial, but at least now there is a line of sight toward resolution,” Vital Knowledge analyst Adam Crisafulli said in a note.
Trump issues 48-hour ultimatum to Iran
Over the weekend, Trump warned that Iran had 48 hours to reopen the Strait of Hormuz or the United States would “obliterate” critical energy infrastructure in the country.
Iran responded by threatening to strike key energy and water infrastructure across the Middle East and warned that it would fully shut the strait.
Reports indicated that hostilities between Iran and Israel continued through the weekend, with the conflict now entering its fourth week.
Trump’s deadline — especially if Washington follows through on its threat — could mark a significant escalation in the war, particularly if Iran responds with retaliatory attacks.
Even so, gold has struggled to benefit from the heightened geopolitical tensions tied to the conflict.
Gold pressured by inflation and rate concerns
Concerns about the inflationary consequences of the Iran war have weighed heavily on gold prices over the past several weeks, pushing the metal well below key levels and limiting its ability to rebound.
Markets worry that a prolonged conflict could push global inflation higher through rising energy costs, potentially prompting major central banks to adopt a more aggressive stance on interest rates.
Those concerns intensified last week after both the European Central Bank and the Bank of England indicated that rate hikes could still occur this year.
The Federal Reserve did not signal any plans for rate increases, but investors have steadily reduced expectations for rate cuts by the central bank this year.
“The market is trading less on geopolitical hedging flows and more on fears that stickier inflation could prompt a more hawkish central bank stance,” analysts at OCBC said in a note.
However, they added that the long-term drivers supporting gold remain intact and that prices could strengthen again in the near future.
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