Gold fell as much as 2.2% Monday after the US and Iran agreed to stop attacks, with peace talks set for Doha. A yen slide to a 40-year low added dollar strength pressure, compounding the metal's decline from war-era highs.
Gold fell as much as 2.2% Monday, sliding toward $4,000 an ounce, after the United States and Iran agreed to stop attacking each other. President Donald Trump said peace talks are set to resume Tuesday in Doha, easing a war that has fuelled global inflationary pressures since late February.
The metal pared losses but still closed lower. Gold is down more than 23% since the conflict began and briefly dipped below $4,000 last week. Iranian and US negotiating teams were due in Doha, though Iran said no meeting had been scheduled as weekend missile fire from both sides tested the interim ceasefire.
The drop was compounded by a stronger dollar. The yen slid to 161.98 against the greenback, its weakest level since 1986. A firmer dollar typically pressures gold, which is priced in the US currency. The yen's decline put traders on high alert for Japanese authorities wading into the market to support the currency, a move that could further strengthen the dollar in the short run.
Broader markets welcomed the de-escalation. The Dow Jones Industrial Average hit a record closing high, rising 0.6%. The S&P 500 gained 1.2%, and the Nasdaq Composite jumped 2.1%, led by technology shares rebounding from last week's selloff. The rally reflected an unwinding of the geopolitical risk premium that had built up during the four-month-old war. The easing of tensions also lifted Indian equities, though profit booking in heavyweights later capped gains.
The focus now shifts to the Doha talks. A sustained ceasefire would remove a major source of uncertainty for commodity markets, potentially accelerating gold's decline as safe-haven flows reverse. On the other hand, any breakdown in negotiations could send the metal back toward recent highs. The gold profile remains sensitive to both the diplomatic calendar and the dollar's direction, which itself hinges on whether Tokyo intervenes to stem the yen's slide.
Gold is down more than 23% since the war began in late February and briefly dipped below $4,000 last week.
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