Gold Prices Rebound But Head for Worst Month Since 2008 Amid Iran War Uncertainty

Gold prices climbed on Tuesday as investors returned to safe-haven assets during a brief equity market rally, though the precious metal remained on course for its steepest monthly decline in nearly 17 and a half years. Spot gold surged 3.8% to $4,682.23 per ounce, while gold futures gained 3.4% to reach $4,712.55 per ounce.

Despite Tuesday's recovery, bullion was down 11.3% for March, marking its worst monthly performance since October 2008 and snapping a seven-consecutive-month winning streak. The selloff has been driven largely by the ongoing U.S.-Israel military conflict with Iran, which has stoked inflation fears and reduced expectations for future Federal Reserve interest rate cuts, weighing heavily on non-yielding assets like gold and silver.

Market sentiment received a cautious lift after a Wall Street Journal report indicated President Trump was exploring options to wind down military operations in Iran. According to the report, U.S. officials concluded that reopening the Strait of Hormuz through military force would require an extended and complex operation, prompting a potential shift toward diplomatic pressure on Tehran, with support from Gulf and European allies. However, with the strait still closed and roughly 20% of global oil supply disrupted, energy-driven inflation concerns continue to cloud the outlook for precious metals.

Adding to the uncertainty, Trump publicly called on other nations to independently secure the strait, signaling a possible reduction in U.S. military involvement. Secretary of War Pete Hegseth echoed this stance, noting increased vessel traffic through the waterway.

Federal Reserve Chair Jerome Powell offered some reassurance by stating that long-term inflation expectations remain anchored despite near-term pressures. Meanwhile, other central banks, including the European Central Bank and the Bank of Japan, hinted at potential rate hikes to counter rising energy costs, further pressuring gold by lifting global bond yields.

Silver and platinum also posted sharp monthly losses, falling nearly 20% and 18% respectively in March, even as both metals rebounded strongly on the day.