Trump Rejects Iran's Proposal: Gold Prices Under Pressure from Geopolitics and Hawkish Fed
Gold prices have been under pressure due to rising geopolitical tensions and hawkish signals from the Federal Reserve. On September 28, spot gold fell over 0.67% to $4,257.33 per ounce as the U.S. dollar index rebounded about 0.15% in early trading and oil prices opened higher by over 1%. The main driver behind this decline is the signal of a reassessment of geopolitical risks triggered by Trump's rejection of Iran's proposal to reopen the Strait of Hormuz.
The U.S.-Iran conflict has been ongoing, with Iran proposing to reopen the strait within seven days after verification in exchange for the unfreezing of $12 billion in assets, lifting sanctions on Iranian oil, and an end to the conflict in Yemen. Trump rejected this proposal, stating that it was not the deal he was willing to accept.
The strengthening U.S. dollar and rising oil prices have diminished gold's safe-haven appeal, with investors becoming more inclined to hold income-generating assets rather than zero-yield gold. The sustained rise in U.S. Treasury yields has also increased the opportunity cost of holding non-yielding gold.