Gold Firms, Oil Slumps as Trump Halts Iran Strikes on Hopes of Strait of Hormuz Deal

Commodity markets underwent a sharp repricing on Monday as the immediate threat of a U.S. military strike on Iran receded, with bullion rallying and crude oil posting its steepest sell-off in months.

President Donald Trump said the U.S. would hold off on strikes provided a deal with Iran comes together “rapidly,” according to a market analysis published on Medium. Trump claimed Iran and other regional players had asked Washington to pause military action. Iranian officials have denied that direct talks are under way, telling Reuters that current discussions with Oman are limited to shipping routes through the Strait of Hormuz, ING reported.

The shift in rhetoric was enough to knock the war premium out of oil. ICE Brent crude settled more than 7% lower on the day, according to ING, after having traded near $90 a barrel in the prior session. West Texas Intermediate slid as low as $76 a barrel in pre-market trading, according to ZeroHedge, and was later quoted at $76.20, up 0.5% on the day, per NDTV Profit. The divergence reflects continued volatility: Brent was quoted at $80.29, up 1.17%, on the Multi Commodity Exchange, but the overall trajectory was decisively lower.

The trigger for the sell-off was Treasury Secretary Scott Bessent’s comment on CNBC that “we may have Iran deal tomorrow to open Hormuz” or we may not, ZeroHedge reported. The remark amplified Trump’s earlier statement and pushed S&P 500 futures to a fresh all-time high of 7,655. Bessent acknowledged the outcome was uncertain, and ING cautioned that the scale of the sell-off appeared “fairly overdone” given that Iranian officials continue to deny any negotiations and that Trump himself issued warnings if no deal materializes.

While oil plunged, gold moved in the opposite direction. The yellow metal rose 1.35% to 146,241 rupees per 10 grams on the Multi Commodity Exchange of India, NDTV Profit reported, as investors sought safe-haven assets amid the lingering uncertainty. ING noted that gold extended its recovery after posting its first monthly gain since February in July, supported by lower energy prices that eased some inflation concerns. Silver also rose, with September futures on MCX surging 2.16% to 226,398 rupees per kilogram.

ING analysts said lower oil prices improve the macro backdrop for bullion by reducing inflation fears that could keep interest rates higher for longer, though expectations for rates to stay elevated may continue to cap gold’s upside.

The prospect of a reopening of the Strait of Hormuz, through which about a fifth of the world’s oil passes, also affected broader markets. The S&P/TSX Composite Index ended a volatile session down 10 points at 36,136, snapping a two-day rally, as gains in energy and tech stocks were offset by losses in consumer cyclicals, real estate, and utilities, according to the Fool.ca report. Continued progress toward a temporary shipping arrangement between Iran and Oman is being watched closely by investors, the report added.

In cryptocurrencies, Bitcoin neared $65,000 amid improving ETF flows and hopes for a de-escalation in the Middle East, Investing.com reported. Major coins including Bitcoin, Ethereum, and XRP edged higher, with Bitcoin up 1.19% to $63,516, though the Fear & Greed Index remained frozen at 27, indicating persistent fear in the market, according to a Medium analysis.

Despite Monday’s sharp moves, analysts warned that the situation remains fluid. ING noted that the oil sell-off was driven by optimism that may prove premature, and that Iranian denials and the risk of renewed escalation leave ample room for a reversal. The cargo vessel struck by an unidentified projectile off the Omani coast reported by ING also underscores the fragile security environment in the region.