One-Year Low: Gold Plunges and Oil Surges on Trump’s “No Deal Needed” Remark!

Nearly 3% was wiped off spot gold in Thursday’s session. An unusually severe sell-off across global gold markets briefly took the price to US$3,852, a low not seen since October 2025. Gold has now declined for a third consecutive session. Within just a few days, investors’ initial caution had hardened into a clearly bearish stance.

An abrupt turn in Middle East developments, rather than simply dollar strength and rising interest rate expectations, emerged as the underlying trigger when price action across markets was examined. The stronger dollar and higher rate expectations had initially seemed sufficient to explain gold’s retreat. By explicitly stating on social media that the United States did not need a deal with Iran, Trump directly weakened earlier hopes of an easing in the conflict. His apparently simple comment rapidly sent a chain reaction through crude oil, US Treasuries, the dollar and gold. The competing forces of safe-haven demand and interest rate pressure left gold’s vulnerability exposed.

Oil prices climbed as further geopolitical incidents intensified market tensions. Yemen’s Houthis said their attacks had targeted pumping stations on Saudi Arabia’s East–West oil pipeline, oil facilities in Yanbu and a Saudi Aramco building in Riyadh. Interception of the drones involved was reported by the Saudi-led coalition. Four oil tankers in the Strait of Hormuz were hit by explosions, according to Iran’s military. Ukraine also sustained its drone campaign against energy infrastructure in northwestern Russia, with oil storage facilities at the port of Ust-Luga damaged.

The link between more expensive oil and pressure on gold is straightforward. Sustained strength in energy prices would provide further grounds for the Federal Reserve to retain a hawkish stance. With no yield to offer, gold would lose appeal directly if interest rates remained high or rose further. Energy price increases therefore continue to underpin the Fed’s hawkish position. For gold, the resulting higher-rate environment presents a substantial headwind.

Approximately 100% is now the probability investors attach to a December rate increase of at least 25 basis points. That repricing reflects a substantial change in US monetary policy expectations alongside the Middle East developments. Tuesday’s US inflation release beat expectations, while several Fed officials delivered hawkish signals this week, driving a rapid increase in market pricing for a December hike. A 50-basis-point increase has also become a subject of discussion among some investors, with its probability reaching 15%. Even cooling in recent inflation data should not prevent a December increase in short-term interest rates, Fed Governor Waller explicitly stated. Should inflation worsen, he suggested that a larger move could be considered. Concern about inflation’s persistence was also voiced by the presidents of the Cleveland, Chicago and San Francisco Federal Reserve Banks, although their perspectives differed.

A less visible shift in sentiment was taking place beyond the macroeconomic and geopolitical backdrop. Following reports of Nvidia CEO Jensen Huang’s departure, concerns surfaced over the AI giant’s outlook. The news could also shape expectations for US chip export policy. There was no direct link to gold, but risk assets became more volatile and some investors were prompted to reconsider how their assets were allocated.

PPI: Inflation Signals and Gold:

Friday’s US Producer Price Index (PPI) release is the next event in investors’ sights. A clear easing in the data could provide temporary relief for gold prices. If inflationary pressure remains evident in the PPI, however, expectations of sustained high interest rates or additional Fed tightening could strengthen, prolonging the pressure on gold.