Gold Slumps to a One-Year Low as Oil Soars Following Trump’s “No Deal Needed” Remark!

A fall of nearly 3% in spot gold on Thursday took prices briefly to US$3,852, the lowest since October 2025, as global gold markets suffered an unusually sharp sell-off. It was the third consecutive session of losses for gold. In only a few days, caution among market participants had given way to a decidedly bearish outlook.

A stronger dollar and expectations of higher interest rates offered an apparent explanation for the decline in gold. Yet the pattern of moves across markets pointed to a different catalyst: an abrupt change in the Middle East situation. Earlier optimism that the conflict might ease was directly undermined when Trump stated explicitly on social media that the United States did not need a deal with Iran. Despite its apparent simplicity, the remark swiftly set off a succession of moves across crude oil, US Treasuries, the dollar and gold. Those moves laid bare gold’s vulnerability to the competing influences of safe-haven demand and interest rate pressure.

A succession of geopolitical incidents heightened tensions further. Pumping stations along Saudi Arabia’s East–West oil pipeline, oil facilities in Yanbu and a Saudi Aramco building in Riyadh had been attacked, Yemen’s Houthis claimed. The Saudi-led coalition said the drones involved had been intercepted. Explosions had also struck four oil tankers in the Strait of Hormuz, Iran’s military said. In northwestern Russia, Ukraine maintained its drone strikes against energy infrastructure, damaging oil storage facilities at the port of Ust-Luga. The combined effect of these developments was to lift oil prices.

Rising oil prices have a clear route through to gold. Should energy prices stay elevated, they will add further weight to the argument for the Federal Reserve to keep its hawkish stance. Gold pays no yield, so its appeal would be directly diminished by interest rates staying high or moving higher still. Continued increases in energy prices bolster the Fed’s hawkish position, while the higher interest rate environment remains a considerable obstacle for gold.

US inflation figures released on Tuesday exceeded expectations. Together with hawkish signals from several Fed officials this week, the data drove a rapid rise in market pricing for a December rate hike, as US monetary policy expectations changed markedly alongside events in the Middle East. Investors now put the probability of an increase of at least 25 basis points in December at approximately 100%. A larger, 50-basis-point hike has also entered the discussion, with its probability climbing to 15%. Even if recent inflation figures showed some cooling, short-term interest rates should still be raised in December, Fed Governor Waller explicitly stated. He also indicated that a deterioration in inflation could justify considering a larger increase. Persistent inflation likewise drew concern from the presidents of the Cleveland, Chicago and San Francisco Federal Reserve Banks, each approaching the issue from a different perspective.

Less conspicuously, sentiment was changing beyond the pressures arising from macroeconomics and geopolitics. The outlook for the AI giant came under scrutiny after news of Nvidia CEO Jensen Huang’s departure, which could also influence expectations for US chip export policy. This development was not directly connected to gold. It nevertheless added to volatility across risk assets, prompting some investors to reconsider their asset allocations.

Gold Faces Further Pressure if PPI Signals Persistent Inflation:

Friday’s release of the US Producer Price Index (PPI) is now drawing investors’ attention. Further evidence of inflationary pressure could bolster expectations that the Fed will keep interest rates high or tighten policy again, maintaining pressure on gold. A clear easing in the figures, by contrast, could allow gold prices a temporary reprieve.