Gold slumps to one-year low as Middle East tensions drive inflation fears
Spot gold fell 2.7% to $3,881.70 per ounce, its lowest price since October 2025, after Trump rejected a Middle East peace deal.
Why it matters
Gold's fall signals that markets expect the Federal Reserve to stay tough on inflation and rates, affecting returns on defensive investments worldwide.
In Australia. Australian investors holding gold or gold-backed products face lower valuations; domestic gold miners see weaker prices for their output.
Key facts
- $3,881.70
- Gold price per ounce
- 2.7%
- Price decline
- October 2025
- Lowest since
- 85%
- Rate hike probability
- Gold dropped sharply Thursday as hopes for Middle East peace collapsed and oil prices climbed 2%.
- Trump said the US did not need a deal with Iran, ending speculation about resolving the conflict that spread across the region.
- Rising oil lifts inflation fears and expectations that the Federal Reserve will keep interest rates high.
- Higher rates reduce gold's appeal because it yields no income; a stronger dollar also makes the metal costlier for overseas buyers.
- Markets now see 85% odds of a rate hike in December.
