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Gold drops 3% to over one-year low as fading Middle East peace hopes fan inflation fears

By Reuters News

By Vedika Thorat

Nov 12 (Reuters) - Gold prices slid 3% on Thursday, extending losses for a third straight session to hit a more-than-one-year low, as oil prices climbed on fading hopes for peace in the Middle East that spurred fears of higher inflation and elevated interest rates.

Spot gold dipped 3.0% to $3,867.96 per ounce by 10:01 a.m. ET (1501 GMT), having touched its lowest level since October 2025 earlier in the session.

US gold futures for December delivery fell 3.2% to $3,872.00 per ounce.

US President Donald Trump said on social media on Thursday that the US did not need a deal with Iran. "Those days had long since passed," he said, quashing hopes of a deal to end the conflict, which started in late February with US-Israeli strikes on Iran and has spread across the Middle East.

"If crude oil prices spike higher on this news, that's negative for gold from an inflation perspective," said Jim Wyckoff, a market analyst at American Gold Exchange.

Oil futures rose over 1%, fanning inflationary concerns and expectations that the Federal Reserve could keep interest rates higher for longer. O/R

A hot US consumer prices reading on Tuesday, hawkish remarks from Fed officials this week and a US dollar index rally to a near 19-month high "are working to press the gold market lower", Wyckoff added. US/ USD/

Markets see a 91% chance of a 25-basis-point rate hike in December, while the probability of a larger 50-basis-point move also increased. <FedWatch>

Higher interest rates reduce the appeal of non-yielding bullion, while a stronger dollar makes gold costlier for overseas buyers.

Investors now await US producer price index data due on Friday for further cues on inflation and the monetary policy outlook.

Among other metals, spot silver fell 3.33% to $49.97 per ounce after touching its lowest level since November 4 earlier in the session, while spot platinum lost 1.2% to $1,519.05 after hitting its lowest since November 6. Spot palladium dropped 3.0% to $997.19, a day after reaching its highest level since October 22.

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