Gold jumps over 2% as oil slump eases inflation fears amid Trump Iran talks

Gold prices surged on Wednesday, driven by a significant decline in oil prices that helped alleviate concerns about persistent inflation pressures. The precious metal's rally comes amid reports that Washington is actively developing a proposal to resolve the ongoing Middle East conflict.

Spot gold demonstrated strong performance, climbing 2.56% to reach $4,588 per ounce, while April gold futures showed even more pronounced gains, advancing over 4% to $4,597.7 per ounce.

The market movement followed statements from U.S. President Donald Trump on Tuesday, confirming that the United States and Iran are currently engaged in negotiations. Trump indicated that Tehran appears motivated to reach a peace agreement, despite Iran's public denials of direct talks with Washington.

During remarks in the Oval Office, Trump revealed his decision to step back from recent threats to target Iranian energy infrastructure, explaining that the shift was "based on the fact we're negotiating." When pressed for additional details on his change in approach, Trump expressed optimism about the diplomatic process, stating, "They're talking to us, and they're talking sense."

Oil markets responded immediately to Trump's comments, with prices declining sharply. International benchmark Brent crude futures dropped approximately 6% to $98.31 per barrel, while U.S. West Texas Intermediate futures fell roughly 5% to $87.65 per barrel.

The U.S. dollar index, which tracks the greenback's performance against a basket of major currencies, weakened by 0.17% during early Asian trading hours.

Despite Wednesday's gains, gold prices remain approximately 17% below their late-January peak, indicating significant room for potential recovery.

Goldman Sachs maintains bullish outlook

Goldman Sachs analysts characterized the recent pullback in gold prices as consistent with historical market patterns. The investment bank identified elevated interest rate expectations and increased market volatility as primary factors contributing to the metal's previous decline.

Daan Struyven, Goldman's co-head of global commodities research, addressed the price movement during a Wednesday briefing, stating, "We don't think that the decline … is surprising in light of our existing pricing framework." He emphasized that rising rate expectations have particularly impacted investor demand through gold-backed ETFs, which demonstrate high sensitivity to interest rate changes.

Struyven also noted that periods of extreme market stress can create downward pressure on bullion prices, as investors facing margin calls often liquidate gold positions alongside other assets to meet obligations.

The Goldman analyst suggested that gold's recent rally may have exceeded fundamental value drivers, with the current correction representing "a bit of normalization" in pricing.

Despite short-term volatility, Goldman Sachs maintains its structurally optimistic perspective on gold. The bank forecasts the precious metal will reach $5,400 by year-end, supported by sustained central bank purchasing activity as nations continue diversifying into assets offering "lower geopolitical and financial risks."