Trump’s “No Deal Needed” Remark Sends Oil Surging as Gold Plunges to a One-Year Low!

Global gold markets experienced an unusually sharp sell-off on Thursday. Spot gold tumbled nearly 3% in a single session, briefly touching US$3,852, its lowest level since October 2025. This marked gold’s third consecutive session of losses, with market sentiment shifting from cautious to distinctly bearish within just a few days.

On the surface, gold’s retreat appeared to be a natural response to a stronger dollar and rising interest rate expectations. However, a closer look at movements across markets reveals that the real trigger was a sudden turn in the Middle East situation. Trump explicitly stated on social media that the United States did not need a deal with Iran, directly undermining earlier optimism about an easing of the conflict. The seemingly simple remark quickly triggered a chain reaction across crude oil, US Treasuries, the dollar and gold, exposing gold’s vulnerability as safe-haven demand competed with interest rate pressures.

Meanwhile, a series of geopolitical developments added to market tensions. Yemen’s Houthis claimed to have attacked pumping stations along Saudi Arabia’s East–West oil pipeline, oil facilities in Yanbu and a Saudi Aramco building in Riyadh. The Saudi-led coalition said it had intercepted the drones involved. Iran’s military also said that four oil tankers had been hit by explosions in the Strait of Hormuz. Ukraine continued drone strikes on energy infrastructure in northwestern Russia, damaging oil storage facilities at the port of Ust-Luga. Together, these events pushed oil prices higher.

For gold, the transmission mechanism from rising oil prices is clear. If energy prices remain elevated, they will further strengthen the case for the Federal Reserve to maintain its hawkish stance. Interest rates remaining high, or rising further, would directly reduce the appeal of gold as a non-yielding asset. Higher energy prices continue to reinforce the Fed’s hawkish position, while a higher interest rate environment creates a significant headwind for gold.

Alongside developments in the Middle East, expectations for US monetary policy shifted significantly. Stronger-than-expected US inflation data released on Tuesday, combined with hawkish signals from several Fed officials this week, prompted markets to rapidly increase their pricing of a December rate hike. Investors now see an approximately 100% probability of an increase of at least 25 basis points in December. Some have even begun discussing the possibility of a 50-basis-point hike, with the probability rising to 15%. Fed Governor Waller explicitly stated that short-term interest rates should still be raised in December even if recent inflation data showed some cooling, and suggested that a larger increase could be considered if inflation worsened. The presidents of the Cleveland, Chicago and San Francisco Federal Reserve Banks also expressed concerns about persistent inflation from different perspectives.

Beyond macroeconomic and geopolitical pressures, market sentiment was also quietly shifting. News of Nvidia CEO Jensen Huang’s departure raised concerns about the outlook for the AI giant and could also influence expectations for US chip export policy. Although the development had no direct connection to gold, it contributed to volatility in risk assets and prompted some investors to reassess their asset allocations.

Market Insight:

Investors are now turning their attention to the US Producer Price Index (PPI), due for release on Friday. If the PPI continues to signal inflationary pressure, expectations that the Fed will maintain high interest rates or tighten policy further could strengthen, keeping gold under pressure. Conversely, a clear easing in the data could give gold prices a brief respite.