Gold is on track for its worst monthly decline since 2008 as a historic energy supply shock amid the Iran war spooks investors who were hoping for interest-rate cuts.
Spot prices are poised for a drop of 14.6% in March – the largest monthly fall since October 2008, when gold plummeted 16.8% during the Great Recession.
Gold futures had jumped 1.9% to $4,646.10 an ounce as of about 12:15 pm ET Tuesday, while the Dow Jones Industrial Average rose 514 points, or 1.1%, on news President Trump believes the Iran war is likely to end soon.
Still, investors are concerned that a boost in inflation could delay interest-rate cuts – a hit to gold, which performs better alongside lower interest rates.
While heightened geopolitical anxiety typically helps gold’s performance, the conflict has reheated fears of inflation as the Strait of Hormuz crisis pushes oil prices well above $100 a barrel – sending gasoline to $4 a gallon on Tuesday, the highest level since 2022.
“For so long as the dollar continues to strengthen, the Iran war remains localized and is perceived as having a fairly short duration, and interest rates remain comparatively high, gold will remain weak,” Kenin Spivak, chairman and CEO of SMI Group, told The Post.
Markets were largely expecting two interest-rate cuts in 2026 before the US and Israel began strikes on Iran on Feb. 28. Now the Fed’s dot-plot shows just one rate cut this year.
As recently as last Friday, traders were pricing more than 50% odds of a rate hike this year – though those odds plummeted after Fed Chair Jerome Powell said there is no need for a hike.
“It is not a trend reversal, it is a reset in positioning that has created the most compelling accumulation opportunity since late 2023,” Tracy Shuchart, senior economist at NinjaTrader, said of declines in gold.
“What left the market was the leveraged speculative money, the tourists chasing momentum, and their exit is precisely the kind of washout that sets the floor for the next leg higher,” Shuchart told The Post.
Goldman Sachs has maintained its forecast for gold to hit $5,400 an ounce by the end of 2026.
There is still uncertainty around how long the war in Iran could last, and whether oil prices could remain elevated long after the conflict winds down since it will take time to repair damaged energy facilities in the Middle East.
Trump said Monday that a deal with Iran is “probably” close – though he warned that the US would attack Iran’s power plants, oil wells and key energy hub at Kharg Island if an agreement to reopen the strait is not reached within a week.
The president has told aides he is willing to end the US military campaign against Iran even if the Strait of Hormuz – a critical waterway for 20% of the world’s oil – remains largely closed, the Wall Street Journal reported Monday night.
The White House did not immediately respond to The Post’s request for comment.
Secretary of War Pete Hegseth said Tuesday negotiations with Iran are “very real” and “gaining strength” – though Iranian officials have denied holding talks with the US.
Meanwhile, Trump has reportedly deployed thousands of troops to the Middle East, along with 2,500 Marines. It is unclear whether this should be viewed as an escalation or an attempt to deter Iran from further attacks.
