Why Has Trump’s “No Deal Needed” Remark Sent Oil Soaring and Gold Plunging to a One-Year Low?

Bearish sentiment took hold in global gold markets on Thursday as an unusually steep sell-off drove spot prices down nearly 3% in a single session. Gold briefly touched US$3,852, the lowest level since October 2025. With losses extending to a third consecutive session, the market mood had moved from caution to outright bearishness in just a few days.

A firmer dollar and higher interest rate expectations initially appeared to explain gold’s decline. Cross-market price movements, however, pointed to an abrupt shift in the Middle East situation as the underlying catalyst. In a social media post, Trump explicitly said the United States did not need a deal with Iran, directly denting earlier hopes that the conflict would ease. That seemingly straightforward comment set off a rapid chain reaction across crude oil, US Treasuries, the dollar and gold. The response highlighted gold’s vulnerability when demand for safe-haven assets competes with pressure from interest rates.

Further geopolitical developments compounded market unease. Pumping stations on Saudi Arabia’s East–West oil pipeline, oil facilities in Yanbu and a Saudi Aramco building in Riyadh were among the targets Yemen’s Houthis claimed to have attacked. According to the Saudi-led coalition, the drones involved were intercepted. Separately, Iran’s military reported that explosions had hit four oil tankers in the Strait of Hormuz. Continued Ukrainian drone attacks on energy infrastructure in northwestern Russia damaged oil storage facilities at the port of Ust-Luga. Oil prices rose as these developments unfolded.

Higher oil prices feed through to gold through a clear channel. Persistently elevated energy costs would bolster the case for the Federal Reserve to retain its hawkish stance. As an asset that offers no yield, gold would become less attractive if interest rates stayed high or increased further. Energy price gains continue to support the Fed’s hawkish position, leaving gold facing a substantial headwind from the higher interest rate environment.

US monetary policy expectations also underwent a marked shift alongside events in the Middle East. Markets sharply increased the extent to which they were pricing in a December rate hike after Tuesday’s stronger-than-expected US inflation figures and hawkish messages from several Fed officials this week. The probability investors assign to an increase of at least 25 basis points in December is now approximately 100%. Discussion has even turned to a possible 50-basis-point hike, the probability of which has risen to 15%. Fed Governor Waller made clear that short-term interest rates should rise again in December even if recent inflation readings indicated some cooling. He also suggested that worsening inflation could warrant consideration of a larger increase. From their respective perspectives, the presidents of the Cleveland, Chicago and San Francisco Federal Reserve Banks likewise voiced concerns over persistent inflation.

A quieter change in market sentiment accompanied these macroeconomic and geopolitical pressures. Concerns over the AI giant’s prospects emerged following news of Nvidia CEO Jensen Huang’s departure, a development that could also affect expectations for US chip export policy. While unrelated directly to gold, the news added to risk-asset volatility and led some investors to review their asset allocations.

Can Gold Find Relief From Inflation Pressures?

Friday’s US Producer Price Index (PPI) release is the next focus for investors. Continued signs of inflationary pressure in the PPI could reinforce expectations of high interest rates or further policy tightening by the Fed, leaving gold under pressure. By contrast, a clear moderation in the figures could offer gold prices a short-lived reprieve.