Gold Slips Toward $3,900 After Oil Rebounds on Signs US and Iran Are Far From a Deal

Since gold bounced off a one-year low on Monday, Nov. 2, the rebound has already started to fade. Spot gold fell as much as 1% on Tuesday, Nov. 3, to trade just above $3,900 an ounce, according to Bloomberg.

At 00:55 ET, spot gold was down 0.7% at $3,920.44. US gold futures lost 1% to $3,929.67. Early Asian trade had looked better: spot gold was up 0.3% at about $3,956 as of 8:29 a.m. Singapore time, per ATFX's market note, before sellers took over.

Oil flips back up

The reversal followed oil. Crude rose again after Reuters reported, citing an unnamed Iranian official, that Washington and Tehran remain far from an agreement. That is a single-source claim, and neither government has put out a matching statement.

Oil had dropped more than 7% on Monday. West Texas Intermediate fell 7.24% to $96.58 and Brent fell 7.49% to about $104.93 as Iranian and Qatari officials held talks on a deal to end the war. Iranian President Masoud Pezeshkian said his government had received greater authority from the supreme leader to pursue negotiations. Iranian Foreign Minister Abbas Araghchi said a deal was possible if the US "demonstrates goodwill," per Iran's state news agency IRNA.

Gold has traded inversely to oil in this stretch because of inflation and rates. The war has pushed energy prices up and fed inflation, which raised pressure on central banks to hike. Gold pays no interest, so higher rates hurt it. Bloomberg said fears over inflation and possibly higher interest rates "resurfaced" as oil climbed.

Strikes continue alongside talks

The diplomatic track is running next to live military contact. A US official confirmed Monday that US forces struck Iran's Qeshm Island in the Strait of Hormuz after Iran fired at a US aircraft. The official called the strike "defensive" and said it did not signal a return to US strikes on Iran or the start of an escalation.

IRNA reported five explosions in succession on the island, which hosts an underground missile site, a naval base and a major desalination plant. Bloomberg described the US attacks as smaller-scale and ongoing.

President Donald Trump called the conflict a "very soft war" on Fox's "Hannity" on Monday and said the US could hit further targets "in one hour." He said Iran is "not in a good negotiating position." In a Nov. 1 interview with Right Side Broadcasting Network, he said: "Either they'll make a deal, or we'll just end it." Secretary of State Marco Rubio said Trump would prefer to resolve things peacefully. The Epoch Times reported that Trump has previously said he would not attack Tehran before the midterms.

Metals under broader pressure

Oil is not the only pressure. Silver fell 2.8% to $49.2455. Platinum lost 1% to $1,432.32 and palladium fell 1.6% to $952.15. The dollar index slipped 0.1% to 101.75.

Gold fell 6.8% in October and dropped 3.6% on Friday to its lowest close since October 2025. Analysts quoted by Reuters tied Friday's slide to a sell-off in technology and AI stocks that triggered a dash for cash. Investing.com reported that the weakness in Asian tech shares on Tuesday, following a deeper US chipmaker sell-off, left gold exposed to more selling.

Gold is still more than 25% below its January record above $5,500.

Midterms and the Fed

Voters go to the polls today, Nov. 3. Investing.com said the results could move gold during Wednesday's Asian session, as investors weigh whether a shift in the political landscape refocuses attention on inflation and deficits.

Analysts disagree on how much that matters. Carsten Menke of Julius Baer said the US fiscal backdrop is unlikely to change enough to make a difference for gold.

On the rebound itself, independent analyst Nikos Tzabouras warned Monday that it "may prove short-lived." He said optimism over a US-Iran breakthrough and doubts about the AI boom were letting some doubt creep in over how far the Fed must tighten. He added that markets "are likely to tread carefully into the US midterms, which could mark a turning point for the Middle East conflict."

There are supports. Investing.com noted that gold's relative strength index moved into oversold territory last week, and ANZ pointed to physical demand, particularly from Chinese households.

The rate question is the larger overhang. CME FedWatch showed traders pricing a 77% chance of a Fed rate hike in December on Monday, slightly lower than a week earlier. Whether that number rises or falls depends heavily on whether oil stays near $100 or the Iran talks produce an agreement.