Gold & Silver Surge As Oil Slumps Amid Uncertainty Over U.S.-Iran Peace Deal.

Singapore/Mumbai; May 2026: Gold and silver are no longer trading like traditional safe havens. As oil prices tumbled on Iran peace hopes, both metals exploded higher alongside broader risk assets.

• Gold and silver surged as oil tumbled on US-Iran peace hopes;
• Both metals continue to trade more like risk assets than havens;
• Correlations with yields, the US dollar, and equities remain extremely strong;
• Gold breaks April downtrend, silver surge stalls at familiar level;
• Gulf Headlines Continue to Drive Markets;
• Gold and silver surged on Thursday as reports emerged that the US and Iran may be edging closer to a peace deal, strengthening their newfound reputation as highly volatile risk assets rather than traditional geopolitical hedges.

That may sound counterintuitive given easing tensions in the Gulf helped send oil prices tumbling and boosted broader risk appetite, but it fits perfectly with how these metals have traded for months. Like so many other markets lately, they remain beholden to sentiment towards what’s happening in the Gulf, moving in lockstep with stocks while retaining ridiculously strong inverse relationships with bond yields, the US dollar and volatility measures, all of which remain heavily influenced by fluctuations in crude oil prices.

The correlation matrix below depicts the trajectories. Over short-term horizons, gold and silver have traded almost perfectly inversely to US Treasury yields, the dollar and volatility gauges while maintaining strong positive relationships with global equities and S&P 500 futures.

Silver, in particular, increasingly resembles a leveraged play on swings in broader risk appetite rather than a traditional defensive asset. The bracketed figure shows the change in the relationship over the past week. That helps explain Thursday’s (07th May) move. Reports that US and Iran may be nearing a framework agreement sparked a sharp reversal lower in crude oil prices, dragging volatility and the dollar down with it while helping to support equities and lower bond yields. Gold and silver simply followed the broader macro impulse.

At 15:31 ET (19:31 GMT – 03:00; Today, 08th May, IST), spot gold was up 0.3% to $4,705.76/oz, while gold futures climbed 0.4% to $4,714.84/oz. Both contracts pulled back from two-week highs.

Iran, meanwhile, has provided more mixed messaging. Iran’s state media said Tehran was still reviewing the U.S. proposal and had not yet reached a conclusion, citing foreign ministry spokesperson Esmaeil Baqaei. But other media reports cited an Iranian official who described the U.S. peace plan as an American wish list. Iran is anticipated to give mediators their response by Thursday. Iran had set up a new protocol for tankers looking to transit the Strait of Hormuz, where the ships need to fill out a document titled “Vessel Information Declaration”. The document must be filled out or the ships risk attack, Iranian authorities have asserted.

Meanwhile, the United States have flagged that Iran wouldn’t allow the U.S. to reopen the strait with an “unrealistic plan” and then exit the war without paying any reparations “for all the damage inflicted on Iran,” citing comments from senior official Mohsen Rezaei.

The U.S. earlier this week paused an effort called “Project Freedom” to safely help commercial ships transit the strait. The WSJ also reported that Saudi Arabia and Kuwait had lifted restrictions on the U.S. military’s use of their bases and airspace, citing U.S. and Saudi officials, paving the way for the Trump administration to restart Project Freedom.

As per international experts, Gold is exhibiting a certain level of counterintuitive behavior. An energy shock sparked by the closure of the strait, a vital waterway off Iran’s southern coast for a fifth of the world’s oil, has, in turn, fueled worries over a spike in inflationary pressures around the world. Expectations have subsequently grown that central banks, especially the Federal Reserve, could react by raising interest rates, a trend which may not bode well for non-yielding assets like gold.

At the same time, the easing in oil prices this week has helped reduce some fears of prolonged inflation, boosting the appeal of bullion. Similarly, a softer U.S. dollar has also burnished gold recently, making it less expensive for overseas buyers. The greenback has become a relative safe-haven during the Iran conflict, thanks partially to the view among many traders that the American economy, as a major energy exporter, may be broadly immune to higher oil prices. Signs of detente, as a result, have hit the dollar and led investors back into risk assets.

Still, gold’s recovery since the end of March has been significantly slower than that seen in equities. The yellow metal slumped in March and posted losses in April, bucking its historical trend of usually rising during a geopolitical crisis.

“Gold’s behavior since the escalation of conflict in the Middle East has been, at first glance, counterintuitive. Periods of geopolitical stress typically push investors toward gold as a safe haven. Instead, gold prices have struggled to gain any sort of consistent traction, even amid one of the most severe global energy disruptions in decades”, Kristian Kerr, head of macro strategy at LPL Financial, said yesterday (07th May). “The closure and effective throttling of the Strait of Hormuz has produced one of the largest energy supply shocks in history. With tanker traffic collapsing and exports curtailed, oil revenue across the Persian Gulf has fallen sharply. For countries that rely on energy exports to generate dollar inflows, this is not merely a growth issue; it is a liquidity problem”, he said, while further adding – “In that environment, gold’s Tier 1 status makes it unusually usable. Not as a store of value, but as a source of dollars. Selling or swapping gold holdings provides immediate access to the currency that still sits atop the global funding hierarchy: the U.S. dollar. This helps explain gold’s unusual price action”.

Team Maverick.