Gold and Silver Prices Drop Sharply as Trump's Iran Pause Eases Safe-Haven Demand

Precious Metals and Energy Markets React to Trump's Announcement

On Monday, spot gold prices saw a sharp decline of over 5% in early trade, dropping to $4,262.50 before recovering to $4,412 by 11:40 a.m. in London. Gold futures were last seen around 4% lower at $4,392, after earlier declining nearly 10%. The move extended across precious metals, with platinum futures falling 9.7% to $1,780.20 and palladium dropping 4.7% to $1,377.50.

The price swings were triggered by US President Donald Trump's announcement that the US would postpone planned strikes on Iranian energy infrastructure for five days, citing progress in ongoing discussions aimed at resolving tensions. The announcement came after days of escalation between the US and Iran, including warnings from Washington over the reopening of the Strait of Hormuz and counter-threats from Tehran targeting US-linked infrastructure.

The pullback in gold, typically viewed as a safe-haven asset during periods of geopolitical uncertainty, coincided with broader market positioning linked to inflation and interest rate expectations. Market strategists noted that the risk of higher interest rates, driven by rising energy prices linked to the conflict, could support demand for government bonds while weighing on non-yielding assets such as gold.

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Dow Jones Industrial Average futures rose 1,100 points, or 2.6 percent, while S&P 500 and Nasdaq-100 futures gained 2.7 percent each. In contrast, crude oil prices declined sharply, with West Texas Intermediate futures falling over 9% to below $90 per barrel and Brent crude dropping over 13% to below $97.

The recent escalation in tensions in West Asia has driven volatility across markets, with oil prices rising on supply concerns and safe-haven demand initially supporting gold. Monday's price action reflected a reversal of that trend, as hopes of a pause in hostilities prompted a shift in investor positioning across global markets.