Gold Rises, Oil Slumps as Trump Pauses Iran Strikes, Triggering Commodity Reversal

Commodity markets staged a sharp reversal this week as the prospect of a de-escalation in the Middle East rattled the war premium embedded in oil prices and lifted gold to seven-week highs. The trigger came from the White House: U.S. President Donald Trump told reporters he believed the war with Iran would be over soon and said the armed forces were experiencing issues with supplies of some weapons, according to multiple reports.

Crude oil prices were headed for a weekly loss, sources at Thestar and indiatimes reported. The retreat in energy costs helped ease inflation concerns and reduce expectations of higher-for-longer interest rates — a dynamic that boosted gold, which is viewed as an inflation hedge but offers no yield and suffers when rates rise.

Spot gold was up 0.6% at $4,262.39 per ounce on Friday, after hitting a seven-week high the previous day, Thestar reported. Prices were up over 5% for the week. IndiaTimes put spot gold slightly lower at $4,235.57, but still up 4.8% for the week. U.S. gold futures gained 0.5% to $4,321.50, according to Thestar.

“Hopes of peace in the Middle East saw inflation expectations drop, allowing gold to surge higher from a multi-week consolidation above $4,000,” Matt Simpson, a senior analyst at StoneX, told Thestar.

Trump’s decision to pause strikes was detailed in a separate crypto-market analysis from Medium. The report, dated August 3, stated that Trump said the U.S. would hold off on strikes provided a deal comes together “rapidly,” claiming Iran and other regional players asked Washington to pause. Iran said its negotiations with Oman over the Strait of Hormuz are in their final stages, and Saudi Crown Prince Mohammed bin Salman publicly urged Trump to prioritize dialogue, the Medium report added.

The clearest signal of the market’s shifting view came from the oil market. Brent crude sat flat at $90.12 (0.00%) rather than gapping higher, the Medium analysis noted. The supply-shock premium that had hung over the complex through July deflated instead of detonated, it said.

The same geopolitical shift rippled into digital assets. Leading cryptocurrencies edged higher on Tuesday, August 4, as investors weighed the prospects of a U.S.-Iran peace agreement after weeks of fighting, according to a source at Benzinga. The Medium report provided more granular detail: Bitcoin traded at $63,516 (up 1.19%), Ethereum at $1,888.14 (up 2.38%), and ADA posted an 8.59% gain. The report described the broad move as a shared risk signal returning to the driver’s seat as the war premium came off the tape.

Despite the rally, market anxiety remained elevated. The Medium analysis noted that the Crypto Fear & Greed Index sat unchanged at 27 — still in “Fear” territory — a contradiction to the green tape.

Traders are now turning to U.S. jobs data to gauge the interest rate outlook. The U.S. Labor Department’s nonfarm payrolls report for July was due at 1230 GMT on Friday, both Thestar and indiatimes reported. According to the CME FedWatch Tool, traders saw a 55% chance of a U.S. rate hike in September, down from 63% a week ago, Thestar noted. IndiaTimes reported that Federal Reserve Bank of St. Louis President Alberto Musalem added his voice to the chorus of central bankers who believed the central bank should have raised its interest rate target last week. The Fed held its target range steady at 3.5% to 3.75% on July 29 despite inflation standing well above 2%.

Data showed the number of Americans filing claims for unemployment benefits increased slightly last week, while layoffs dropped to a two-year low in July, consistent with a stable labor market, IndiaTimes reported.

“Going into August, we are somewhat friendlier towards gold and expect a wider trading band to set in,” Marex said in a monthly note, as quoted by Thestar.

Spot silver added 1.3% to $62.27 on Friday, platinum rose 0.5% to $1,737.25, while palladium dropped 0.2% to $1,368.37. All three metals were headed for weekly gains, Thestar reported. IndiaTimes gave slightly different levels: silver at $61.26, platinum at $1,720.75, and palladium at $1,363.50, with silver and platinum down fractionally on the day.

The combination of lower oil prices, a weaker dollar, and a diplomatic off-ramp in the Gulf has reset the macro backdrop for commodities, with gold reclaiming its role as the primary beneficiary of falling real yields and easing geopolitical risk.