Gold prices rebounded in early trading after US President Donald Trump indicated that the ongoing conflict involving Iran could be resolved soon, easing some geopolitical stress that had driven sharp movements across commodities and currencies. The shift in tone triggered a decline in oil prices and the US dollar, allowing bullion to recover losses from the previous session.

Spot gold rose as much as 1.1% to trade near $5,200 per ounce, reversing earlier declines as investors reassessed risk conditions in global markets. The move came after crude oil prices plunged more than 10%, reflecting a potential cooling of supply disruption fears linked to tensions in the Middle East.

The development follows two weeks of escalating conflict that had previously raised serious concerns about energy supply disruptions. Markets had been particularly focused on the Strait of Hormuz, a critical maritime chokepoint through which nearly one-fifth of the world’s oil and liquefied natural gas shipments pass. Iranian missile strikes on regional energy infrastructure and the effective closure of the passage had pushed crude prices sharply higher and triggered global inflation concerns.

However, Trump’s comments suggesting the conflict could be resolved “very soon” altered short-term market expectations. At the same time, the Bloomberg Dollar Spot Index weakened by about 0.4%, which typically supports gold prices because bullion is priced in dollars and becomes cheaper for international buyers when the currency declines.

Despite the rebound, the broader trajectory for gold remains complex. The surge in oil prices during the height of the conflict had strengthened inflation expectations, leading investors to reassess the likelihood of interest rate cuts by the US Federal Reserve and other major central banks. Higher interest rates tend to be negative for gold because the metal does not generate yield.

According to comments reported by Bloomberg, Suki Cooper, global head of commodities research at Standard Chartered Plc, noted that gold initially benefited from geopolitical risk but later faced selling pressure as investors sought liquidity.

“In periods of high risk, gold usually rises due to geopolitical premiums,” Cooper explained. “But when investors require cash to manage losses elsewhere, gold often becomes one of the first assets sold, especially if it has performed strongly.”

That dynamic has been visible in recent investment flows. Exchange-traded funds backed by gold recorded significant outflows last week, with total holdings declining by nearly 30 tonnes, marking the largest weekly reduction in more than two years. The withdrawals suggest that institutional investors are reducing exposure amid changing expectations around interest rates and global risk conditions.

Data cited in reports from bloomberg indicate that ETF investors have been responding to the market’s shift away from aggressive monetary easing bets. As expectations for Federal Reserve rate cuts diminish, demand for non-yielding assets such as gold typically weakens.

Analysts at TD Securities have also highlighted a divergence between financial market flows and physical demand. Daniel Ghali, senior commodity strategist at the firm, said there are signs that traders in the over-the-counter physical market have begun “buying the dip,” although volumes remain relatively modest.

At the same time, the geopolitical backdrop remains uncertain. During a press conference in Florida, Trump said the US Navy would escort tankers through the Strait of Hormuz to ensure safe passage for global energy shipments. However, the administration did not provide detailed operational plans, and the president acknowledged that the conflict may not end immediately.

These developments suggest that markets are entering a phase of heightened sensitivity to geopolitical signals. While oil prices have corrected sharply on hopes of de-escalation, any renewed disruption to shipping routes or energy infrastructure could quickly reverse the trend.

From a technical standpoint, analysts are watching key support levels in gold. According to Standard Chartered, the metal could initially find support around $5,000 per ounce, with stronger structural support closer to $4,500 if selling pressure intensifies.