Gold Rises Slightly After Trump Delays Iran Strike, But Energy Inflation Risks Remain
Gold prices gained modestly after US President Donald Trump's decision to delay strikes on Iran's electricity infrastructure provided a temporary respite from the sharp selling pressure that has persisted throughout the war. Gold rose as much as 0.9% in early trading, after falling nearly 2% in the previous session and extending its decline to a ninth straight day.
The improvement in sentiment occurred as the market assessed that the chances of an immediate escalation had eased. Trump announced a five-day delay to previously threatened strikes and mentioned "productive talks." Following the statement, US stocks rallied, while Treasury yields and the dollar weakened. However, Tehran denied any talks, keeping market optimism fragile.
Oil held relatively steady on Monday after plunging 10% in the previous session, but uncertainty about the continuation of negotiations and the restoration of shipping flows in the Strait of Hormuz remains high. Damage to energy infrastructure will also take time to repair, so inflation risks remain despite the initial correction in oil prices.
The threat of energy inflation maintains expectations of high interest rates—and even potential tightening—from the Fed and other central banks. This presents a drag on non-yielding precious metals and explains why gold rallies tend to be restrained despite more positive geopolitical headlines.
This dynamic has historical precedent. Following Russia's invasion of Ukraine in 2022, gold surged as a safe-haven asset, only to weaken for months when energy shocks spilled over into inflation and interest rate policy. Some analysts believe a similar pattern is emerging today: investors often sell their most liquid and profitable assets—including gold—to meet margin calls or cover losses in other assets.
Despite falling nearly 17% from the outbreak of war in late February through Monday's close, gold had previously been on an uptrend supported by geopolitical tensions, trade issues, and central bank purchases. However, for energy-importing countries that have traditionally been accumulating gold purchases, rising oil and gas bills could reduce the scope for adding to gold reserves.
At 7:59 a.m. in Singapore, spot gold rose 0.8% to US$4,441.01 per ounce. Silver rose 0.9% to US$69.76, while platinum and palladium also strengthened. The Bloomberg Dollar Index edged up 0.1% after falling 0.4% in the previous session.
Source: Newsmaker.id
