Gold posts worst month since 2008 despite rebound on hopes of de-escalation between the US and Iran

The precious metal rose for a third straight session, but still recorded its steepest monthly drop since the global financial crisis as Middle East tensions continued to shake global markets.

Gold posted its worst monthly performance since 2008 in March, even as it ended the final session of the month sharply higher on signs that the conflict between the United States and Iran could be moving toward a potential resolution.

Bullion climbed for a third consecutive session on Tuesday, supported by a weaker US dollar and lower Treasury yields, after reports suggested that both sides were signaling greater openness to ending the war in the Middle East.

Gold rebounds, but still suffers its worst month since the financial crisis

During the session, spot gold rose as much as 3.9%, reaching its highest level in more than a week before closing up 3.5% at $4,668.06 an ounce.

Even so, the rebound was not enough to offset the heavy losses accumulated throughout March. Gold ended the month down 12%, marking its sharpest monthly decline since the global financial crisis in 2008.

The metal’s volatility has been driven largely by the Middle East war, which has disrupted global markets and fueled concerns over a difficult mix of higher inflation and slower economic growth.

Hopes of an end to the war lifted market sentiment

Gold’s rebound came alongside reports pointing to a possible diplomatic opening between Washington and Tehran.

According to international media reports, US President Donald Trump would be willing to move toward ending the conflict even with the Strait of Hormuz still largely closed. At the same time, Iranian state media reported that President Masoud Pezeshkian said the country was ready to end the war, while reiterating Tehran’s demands.

Those signals helped improve market sentiment, pushing the dollar lower and supporting gold, which often benefits when the US currency weakens.

Interest-rate expectations and forced selling also weighed on bullion

Beyond the war itself, another major factor behind gold’s losses in March was the shift in expectations around monetary policy.

Earlier in the month, traders had been betting that central banks might need to raise interest rates to contain inflation pressures. That view began to reverse after Federal Reserve Chair Jerome Powell said longer-term inflation expectations remained anchored.

Higher interest rates tend to weigh on gold because it is a non-yielding asset. The metal was also hit by forced selling linked to the broader equity market rout during the first weeks of the conflict.

Market remains highly sensitive to headlines from the Middle East

Analysts warned that gold is still trading largely on headlines and rapid shifts in geopolitical sentiment.

In that environment, any credible move toward a peace agreement could trigger fresh swings in bullion prices, while a renewed military escalation could once again change the market’s direction.

Alongside gold, other precious metals also posted strong gains on the day. Silver rose 7.3% to $75.17 an ounce, while platinum and palladium also advanced. Meanwhile, the Bloomberg Dollar Spot Index fell 0.6%.