Gold Falls on Inflation Fears as Conflict Persists; Copper Soars Toward All-Time Highs

Gold prices fell sharply as President Trump's rejection of Iran's peace proposal triggered a bout of inflationThe rate at which prices rise across an economy. concerns rather than classic safe-haven buying. With the Strait of Hormuz blockade persisting and oil prices spiking, expectations for higher energy costs and stagflation have risen, prompting selling in long-durationBond price sensitivity to interest rate changes. assets like gold and Treasury bonds. The logic is perverse but clear: higher inflation reduces the real return on gold, and if central banks are forced to keep rates higher for longer to combat price pressures, the opportunity cost of holding non-yielding bullion increases.

Precious metals investors, including India's government and wealthy citizens urged by PM Modi to pause gold purchases for a year to preserve foreign exchange, are lightening exposure. Zimbabwe's sovereign wealth fund is pivoting to exploit gold mining expansion, while Barrick Gold authorized a $3 billion share buybackA company repurchasing its own shares from the open market. and posted strong first-quarter earnings. Yet the retail bid for bullion has cooled amid the inflationThe rate at which prices rise across an economy. spike and currency weakness in EM nations.

Contrasting sharply with gold's weakness, copper has climbed to a fresh 3-month high of $13,619 per tonne on the LME, only 6% below the January all-time peak near $14,500. Analysts note that the copper market is tightening again, with demand from China holding up despite auto-sales weakness in gasoline vehicles; EV production and industrial infrastructure projects are sustaining need for copper. The rally is underpinned by supply constraints and geopolitical risks that threaten to disrupt mining operations in politically sensitive regions.

This metals divergence highlights a debate within the commodity complex: is the world heading into inflationThe rate at which prices rise across an economy.-driven stagflation that will crush equity and bond valuations, or is growth-linked demand for industrial metals (copper, lithium, rare earths) strong enough to sustain a reflation narrative? Gold bugs argue that geopolitical chaos and central bank policy mistakes will eventually vindicate precious metals. Copper bulls counter that AI infrastructure and green energy transitions will drive demand for years. The answer likely hinges on whether the Iran conflict escalates further or settles, and whether China's property and consumption recovery accelerates.