Gold prices suffered their steepest single-day decline in months on Wednesday, with futures on the Comex exchange falling below $4,100 per troy ounce for the first time since November 2025. The precious metal touched an intraday low of $4,092.3 before settling near $4,097.1, a drop of 4.42% from the previous close. The sell-off accelerated after US President Donald Trump warned that Iran would “pay the price” for refusing to negotiate a nuclear deal, stoking fears of a broader conflict that could fuel inflation and force the Federal Reserve to keep interest rates higher for longer.

From Tehran’s perspective, the escalation has revived memories of the 2019-2020 standoff, when a US drone strike killed Iranian General Qasem Soleimani and gold surged to record highs. But this time, the calculus is different. Analysts in the Middle East note that Iran’s economy is under severe strain from sanctions, and its leadership may calculate that a limited confrontation could distract from domestic unrest. However, the immediate market reaction has been a flight from safe havens, as investors price in the risk of higher US rates to combat any inflation spike from a supply disruption in the Strait of Hormuz.

In London, traders pointed to a confluence of factors driving the rout. Strong US jobs data on Friday had already reinforced expectations that the Fed would maintain its hawkish stance, and Trump’s bellicose rhetoric merely added fuel to the fire. “The market desperately needs some good news,” said one independent metals dealer, noting that gold had been trading in a narrow range for weeks before breaking decisively lower. The August futures contract on Comex slid 3.3% to $4,147.10, while spot gold hit its lowest since March 23 at $4,123.89.

Looking ahead, the trajectory of gold will hinge on two key variables: the outcome of US-Iran diplomacy and the release of US inflation data next week. If negotiations collapse and military action ensues, gold could rebound sharply as a hedge against geopolitical risk. But if the Fed signals further tightening, the metal may struggle to regain its footing. For now, the market is bracing for volatility, with options pricing implying a potential swing of $200 in either direction over the next month.