Gold on track for worst month since 2008 as Iran war drags on

Gold rose on Tuesday morning, but the metal remained on track for its biggest monthly decline in almost 17 years.

until 3:30 a.m. ET, USA spot gold It was trading up nearly 1% at $4,553.69 an ounce. Approval gold futures It settled around $4,553, up 0.6%.

The gains come at a time of continued uncertainty over the course of the US-Iran war, which is entering its fifth week.

The Wall Street Journal reported Monday evening that U.S. President Donald Trump told aides he is willing to end military hostilities against Iran even if the Strait of Hormuz remains largely closed.

In his Truth Social post, Trump said Washington was in “serious talks” with Iranian officials, but added that if an agreement was not reached soon, US forces would attack electrical utilities, oil wells and the critical Kharg Island.

Meanwhile, US Secretary of State Marco Rubio told Al Jazeera in an interview published on Monday that it would take “weeks, not months” to achieve Washington’s goals in Iran.

Reuters reported He said 2,500 US Marines arrived in the Middle East over the weekend, and unnamed officials told the news agency that the troops deployed were from the elite 82nd Airborne Division.

While the conflict in the Middle East put pressure on gold prices, rising oil and gas prices increased expectations that inflation would rise across economies, which would lead to an increase in interest rates.

Spot prices are currently on track for a 14.6% monthly decline; This marks the metal’s biggest monthly decline since October 2008, when prices fell 16.8%.

Shackleton Advisers Investment Manager Wayne Nutland told CNBC on Tuesday that the last four years have changed the way gold is traded.

“Before the Ukraine war, the gold price tended to be inversely correlated with real bond yields and the US dollar; when these indicators fell, the gold price rose, and when these indicators rose, gold fell,” he said.

“The period after the Ukraine war turned these relations upside down, especially until 2025 and early 2026, when gold rose very strongly, well beyond the movements suggested by these historical relations.”

Nutland added that gold returned to its more traditional relationships after the Iran war.

“Bond yields and the US dollar rose, and in this context gold showed its traditional inverse sensitivity to these indicators and fell as a result,” he said. “Gold’s declines have perhaps been exacerbated by the strength of the gold price as we head into 2026 and possibly investors’ desire to liquidate profitable positions.”

Netwealth chief investment officer Iain Barnes said gold’s price volatility had doubled its historic level in recent months due to increased participation from financial investors.

“International central banks seeking to shift reserves away from the U.S. dollar may have started gold’s bull market over the past few years, but eventually there were no new financial buyers left in the market and instead, widespread profit-taking was seen as broader uncertainty hit markets and the dollar rebounded,” he said in an email.

While Barnes noted that the overall economic and market environment differed from 2008, he said there were similarities in that investors with “overextended initial positions in commodities” dramatically increased price movements following a change in fundamentals and sentiment regarding the U.S. dollar.

“In the first half of 2008, investors doubled down on the emerging markets growth story, fueling increases in commodity prices alongside a weakening dollar even as western economies hit buffers,” he added. “As the global financial crisis spread further, global risk appetite collapsed and the dollar rose, while gold, along with more productive commodities such as oil and copper, took a hit. This year, the market has once again found investors’ greatest exposure: overpositioning in gold as the last remaining safe-haven asset.”

In a note published Monday, analysts at Goldman Sachs said they were still constructive on gold despite the sell-off in Iran, noting that markets are re-pricing the U.S. Federal Reserve’s monetary policy path toward either a rate cut or no rate cut at all this year.

“[But] “We continue to forecast gold prices to reach $5,400/t by the end of 2026 as central bank diversification continues, currently subdued speculative positioning normalizes, and the Fed delivers the 50 basis point cuts our economists expect,” they said. “Our base case assumes no further private sector liquidation or additional private sector diversification into gold (beyond modest support from Fed cuts).”

They also noted that the risks to their forecasts are to the downside in the near term, as the persistent disruption in the Strait of Hormuz leaves gold vulnerable to further liquidation, but the medium-term picture differs.

“In the medium term, risks will be to the upside if the Iran incident – ​​together with broader geopolitical developments (e.g. Greenland, Venezuela) – accelerates diversification into gold and depresses perceptions about the financial sustainability of the West,” they said.