Gold Analysis: Negotiation Uncertainty Remains, Who Will Be the Winner in Market Fluctuations

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Source: Huitong Finance and Economics

On Tuesday, March 24, spot gold prices were trading in a narrow range around 4,400 U.S. dollars per ounce. The latest developments in the situation in the Middle East have become the market’s core driver. U.S. President Donald Trump publicly stated that he is working to reach an agreement with Iran in order to end hostilities in the region, and announced a five-day delay of strikes against Iran’s energy infrastructure. However, the latest comments from senior Israeli officials indicate that although Trump is determined to push negotiations forward, Iran is unlikely to accept the core U.S. conditions requiring it to completely curb its nuclear program and ballistic missile project. Iran, meanwhile, denied any substantive contacts. This split in the news flow led to a modest rise in energy prices, increased global inflation expectations, and directly weighed on non-yielding assets. Traders need to focus on the interaction between risks of disruptions in the energy supply chain and the path of monetary policy; the short-term safe-haven premium for spot gold is being partially offset by inflation logic.

The immediate reaction of spot gold to geopolitical signals

Trump’s negotiation remarks briefly sparked a rebound in gold prices from their lows, but skepticism from Israeli officials quickly reversed market sentiment. They emphasized that Iran’s stance is hardline, and that any new round of talks is unlikely to produce substantive results. Iran denies contacts and accuses related statements of aiming to manipulate the market, while news that energy assets were hit expanded the spillover range of the conflict. The risk of disruptions in shipping through the Strait of Hormuz remains persistent, directly pushing up global energy costs. Traders noted that this conflict differs from past situations driven purely by safe-haven demand: after falling more than 20% from the peak of 5,596 U.S. dollars per ounce at the end of January, the cumulative drop since the outbreak of the conflict has been 15% or more. The latest market data shows that although gold prices have rebounded temporarily, they remain under overall pressure, reflecting cautious pricing by the market regarding prospects for an agreement. Elevated energy prices are reshaping the valuation logic for risk assets, and the holding cost of gold as a non-yielding asset is rising significantly.

Inflation expectations and policy path adjustments triggered by rising energy costs

The Middle East conflict has pushed the energy market to the forefront; the surge in crude oil prices has directly reinforced global inflation pressures. Traders recognize that energy-driven cost-push inflation is prompting major central banks to reassess their monetary policy trajectories. Although geopolitical risk is generally supportive for gold, this time the rise in energy prices has warmed market expectations that interest rates will be kept at high levels, sharply reducing the appeal of non-yielding assets. This logic aligns with the pricing mechanism in financial markets: higher commodity prices amplify inflation expectations through supply-chain transmission, thereby compressing gold’s relative valuation space. While Trump’s five-day cooling-off period leaves a window for talks, Israel’s continued actions and Iran’s attacks indicate that energy supply risks are unlikely to fade in the short term; uncertainty in the inflation path will become the dominant variable weighing on gold prices.

Negotiation uncertainty and the evolution of sentiment in the gold market

Trump’s diplomatic strategy shows a pattern of first raising the stakes and then seeking dialogue, but recent statements by Israeli officials clearly point to a low probability of agreement success. Iran denies negotiations and maintains an aggressive posture, further intensifying market concerns that the conflict will become prolonged. Traders evaluate multiple scenarios in depth: if negotiations make progress, energy prices may fall—at least partially and in stages; if negotiations break down and the conflict escalates, it could indirectly affect gold pricing through a double transmission of energy inflation rather than providing pure safe-haven support. Gold price volatility remains high, reflecting investors’ trade-off between safe-haven demand and expectations of tighter policy. Overall, spot gold is currently undergoing a process in which its safe-haven characteristics are being reshaped by macro factors.

Frequently Asked Questions

Question 1: Why couldn’t spot gold continue to rise after Trump announced negotiations?

Answer: Although the statement brought a short-term rebound, Israeli officials clearly questioned the outlook for the agreement. At the same time, Iran denied contacts and maintained its aggressive stance, leading to continued increases in energy prices that reinforced inflation expectations. The market has repriced the main central-bank policy tightening path, putting non-yielding gold under pressure.

Question 2: How does a rise in energy prices change gold’s traditional safe-haven role?

Answer: This conflict comes with a sharp surge in energy costs, and the market’s pricing logic is dominated by inflation expectations. Gold may benefit from a risk premium in the short term, but in a high-interest-rate environment the cost of holding rises. Combined with the transmission effect of commodity prices, it causes gold prices to fall by more than 20% from their peak; cost-push inflation is eroding the appeal of non-yielding assets.

Question 3: How should traders view the core risks amid current gold price volatility?

Answer: The core lies in the overlap between negotiation uncertainty and disruptions in the energy supply chain. In the short term, the Hormuz Strait risk is difficult to eliminate, and adjustments to the inflation path will become the main factor weighing on gold prices.

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