Gold firms as oil plunges on renewed Iran deal hopes after Trump pauses strikes

Gold edged higher on Tuesday as oil prices suffered their sharpest single-day sell-off in months, triggered by President Trump’s decision to halt planned strikes on Iran and open the door to a diplomatic resolution.

ICE Brent settled more than 7% lower on the day, according to ING, while WTI crude tumbled as low as $76 in early trading, according to Zero Hedge. The drop erased a significant portion of the war premium that had built up through July, when the threat of a strike on Iranian energy sites pushed Brent above $90.

Gold, by contrast, extended its recovery after posting its first monthly gain since February, according to ING. The precious metal found support from easing geopolitical tensions and a sharp decline in energy prices, which helped ease inflation concerns, ING reported. “Lower energy prices have eased some inflation concerns, offering a more supportive backdrop for bullion,” the bank said. Reuters confirmed the move, reporting that gold gains as oil slumps after Trump held off an Iran attack.

**What changed the narrative**

The catalyst was a dramatic shift in tone from Washington. President Trump called off strikes against Iran, aiming to get a deal across the line, ING reported. He also suggested talks between the US and Iran had already resumed.

Adding to the optimism, Treasury Secretary Scott Bessent told CNBC, as reported by Zero Hedge, that “we may have Iran deal tomorrow to open Hormuz” — a reference to the Strait of Hormuz, the critical chokepoint for about a fifth of global oil supply. Bessent added a caveat: “or we may not.”

Iranian officials immediately denied that any direct negotiations with the US were under way, insisting that current discussions with Oman are limited to shipping routes through the Strait of Hormuz, ING reported. The denial underscores the fragility of the détente.

Complicating the picture further, reports emerged that a cargo vessel off the Omani coast was struck by an unidentified projectile, according to ING.

**Caveats to the oil sell-off**

ING described the scale of the sell-off as “fairly overdone” given the considerable uncertainty remaining. “We’ve been in this situation multiple times before, only to see things unravel,” the bank wrote, noting that Trump has also issued warnings if no deal materializes.

The broader macro backdrop remained supportive for risk assets. S&P futures hit an all-time high, with equities buoyed by strong earnings and Bessent’s comments, Zero Hedge reported. Base metals moved higher alongside precious metals, with zinc climbing to its highest level in nearly four years, driven by tight concentrate supply, according to ING.

**Gold’s outlook**

ING said gold is likely to remain caught between improving geopolitical sentiment and ongoing uncertainty over US interest rates. “Any further decline in energy prices could help improve the macro backdrop for bullion, though expectations for rates to stay higher for longer may continue to limit upside,” the bank noted.

Silver also moved higher, supported by the broader improvement in precious metals sentiment, ING reported. Zero Hedge confirmed that precious metals were spiking in early trading.

The contradictory signals — a sharp drop in oil, a rebound in gold, and a fear gauge that source 1 described as still frozen at “Fear” — reflect a market pricing a ceasefire that has not yet been signed. With Iran denying talks and a vessel struck off Oman, the geopolitical tail risk has not fully left the tape.