Gold Hits Three-Month High as Oil Falls on Iran Sanctions Announcement

US Treasury Secretary Scott Bessent is set to announce new sanctions against Iran at 2 pm ET today. Markets are already reacting, with gold hitting a three-month high and oil falling by 1.6%. The opposite reaction is unexpected, as tighter sanctions on Iran usually push oil prices up.

The actual driver behind the rise in gold prices today is the US Treasury's buyback program, which has been running for a week. This program targets long-term borrowing costs by repurchasing longer-dated government bonds. It has weakened the dollar and held down long-end yields, making gold cheaper for foreign buyers and more attractive as an alternative store of value.

Bessent has stated that he believes oil markets are misinterpreting the impact of these sanctions, and that crude is underpricing the risk being created by the economic pressure. However, traders appear to be discounting the impact of the sanctions, judging that a week of escalating warnings has already priced in the news.

Once Bessent's press conference wraps up, watch what oil does next. A sharp jump in crude could mean the market now expects the sanctions to genuinely restrict Iranian oil flows, potentially adding another wave of wealth-preservation buying in gold. However, a muted reaction in oil would confirm that markets currently believe the dramatic language from Washington will have limited real-world effect.