Gold on track for worst month since 2008 as Iran war drags on

Gold edged higher on Tuesday morning, but the metal remained on course to notch its biggest monthly decline in almost 17 years.

By 3:30 a.m. ET, U.S. spot gold was trading around 1% higher at $ 4,553.69 per ounce. Front-month gold futures were up by 0.6% to settle at around $4,553.

The gains came amid lingering uncertainty over the trajectory of the U.S.-Iran war, which has entered its fifth week.

The Wall Street Journal reported on Monday evening that U.S. President Donald Trump told aides he was willing to end military hostilities against Iran even if the Strait of Hormuz remained largely closed.

Trump said in Truth Social post that Washington was “in serious discussions” with Iranian officials, but added that if a deal was not reached soon U.S. forces would attack electricity plants, oil wells and the critical Kharg Island.

Meanwhile, U.S. Secretary of State Marco Rubio told Al Jazeera in an interview published Monday that Washington’s objectives in Iran would take “weeks, not months” to achieve.

Reuters reported that 2,500 U.S. Marines had arrived in the Middle East over the weekend, with unnamed officials telling the news agency the deployed troops were from the elite 82nd Airborne Division.

The conflict in the Middle East has weighed on gold prices, with surging oil and gas prices raising expectations of an inflation spike across economies that will lead to a bout of interest rate hikes.

Spot prices are now on track for a monthly decline of 14.6%, which would mark the metal’s biggest monthly drop since Oct. 2008, when prices fell 16.8%.

Wayne Nutland, Investment Manager at Shackleton Advisers, told CNBC on Tuesday that the past four years have changed the way gold is traded.

“Prior to the Ukraine war, the gold price tended to be inversely correlated to real bond yields and the US dollar, with the gold price rising when those metrics fell, and gold falling when those metrics rose,” he said.

“The period after the Ukraine war upended these relationships, in particular in 2025 and into early 2026 when gold rose very strongly, far in excess of the moves suggested by those historic relationships.”

Nutland added that in the wake of the Iran war, gold had reverted to its more traditional relationships.

“Bond yields and the U.S. dollar have both moved higher, and against this backdrop gold has demonstrated its traditional inverse sensitivity to these metrics, falling as a result,” he said. “Gold’s declines have perhaps also been exacerbated by the strength of the gold price going into 2026 and possibly a desire amongst investors to liquidate profitable positions.”

Iain Barnes, chief investment officer at Netwealth, said the price volatility of gold has been…