NextFin News - Gold prices stabilized near $5,140 an ounce on Monday after U.S. President Trump signaled that the military conflict with Iran, which has paralyzed Persian Gulf shipping and sent energy costs soaring, could be nearing a resolution "very soon." The remarks, delivered during a CBS News interview, triggered an immediate retreat in the U.S. dollar and a sharp cooling of the geopolitical risk premium that has defined global markets since the start of the year. While bullion slipped 0.6% in the previous session as the "war trade" began to unwind, the metal found a floor as investors weighed the prospect of a diplomatic breakthrough against the structural inflation risks left in the wake of the fighting.
The conflict has been a primary driver of market volatility throughout early 2026, particularly after Iranian strikes on energy infrastructure and the effective closure of the Strait of Hormuz. These disruptions pushed oil prices into triple digits, complicating the Federal Reserve’s mandate and forcing traders to price out previously anticipated interest rate cuts. U.S. President Trump’s pivot toward a potential settlement has provided a rare moment of relief for risk assets, yet the path for gold remains clouded by the very inflation his administration’s policies have helped stoke. According to Daniel Ghali, senior commodity strategist at TD Securities, gold holdings have been challenged as markets adjust to a "higher-for-longer" rate environment necessitated by the war’s inflationary shock.
Despite the recent cooling, gold remains up nearly 20% for the year, a testament to the broader upheaval of global trade and the persistent threats to the Federal Reserve’s independence under the current administration. The metal has functioned as both a haven and a source of liquidity during the deepening rout in global equities that accompanied the escalation of hostilities. While the Bloomberg Dollar Spot Index fell 0.2% on Monday following the President’s comments, the underlying demand for bullion remains supported by central bank buying and a general fear of currency debasement. Silver also showed resilience, rising 0.3% to $87.25, even as platinum and palladium edged lower in sympathy with the broader cooling of industrial demand expectations.
The winners in this shift are primarily emerging market currencies and equity bulls who had been sidelined by the threat of a wider regional conflagration. Conversely, the "fear trade" that propelled gold toward the $5,200 mark is facing its first real test of the year. If a ceasefire or diplomatic framework is formalized, the immediate pressure on gold could intensify as the liquidity premium evaporates. However, the damage to global supply chains and the precedent of energy insecurity suggest that the floor for precious metals has shifted permanently higher. JP Morgan recently adjusted its long-term outlook, suggesting that even with a de-escalation, the structural risks of the Trump era could keep gold on a trajectory toward $6,300 by the end of the year.
Market participants are now focused on whether the U.S. President’s rhetoric will be matched by a tangible withdrawal of forces or a reopening of the Strait of Hormuz. Until tankers move freely again, the inflationary ghost of the Iran conflict will continue to haunt the Federal Reserve’s policy meetings. The stabilization of gold at these elevated levels suggests that while the panic has subsided, the era of cheap money and low volatility remains a distant memory. The market is no longer pricing in a catastrophe, but it is certainly not pricing in a return to the status quo ante.
Explore more exclusive insights at nextfin.ai.
