Gold prices dropped nearly 2% on Thursday to around $4,460 per ounce, moving close to their lowest level since early January. The decline came as escalating tensions between the United States and Iran drove crude oil prices higher, reigniting inflation concerns and leading investors to abandon expectations for US interest rate cuts this year.
Iran reiterated that it is not engaged in talks with Washington, while President Donald Trump claimed that Iran is “begging” to make a deal, though he questioned whether the United States is currently “willing” to agree to one. This geopolitical uncertainty pushed both the US dollar and Treasury yields higher.
Market pricing now implies a 38% probability of a Federal Reserve rate hike by December and a 93% chance that rates will remain unchanged at the April meeting. Only 3% of traders foresee a rate cut in December, a sharp reversal from pre-conflict expectations, when markets were pricing in at least two cuts in 2026.
