Gold and oil, which had traded in tandem for five months amid US-Iran conflict concerns, began diverging on 1 July 2026 as both assets unwound their war-premium gains at different rates. Gold fell to $3,983.07 per troy ounce on Wednesday, its lowest level since November, recording a 14% quarterly decline — its worst quarterly performance since 2013, according to Oilprice and CNBC. The synchronized correlation between the two commodities broke down as the geopolitical risk premium that had driven the joint rally dissipated.
Gold's quarterly drop was compounded by interest rate concerns, as higher rates increase the opportunity cost of holding non-yielding bullion. Oil prices also declined on Wednesday, with positive signals from indirect US-Iran negotiations reducing the geopolitical risk embedded in crude prices.
Gold spot prices fell from a peak of $4,890.96 in April to a cycle low of $3,942.43 on Tuesday before partially rebounding. WTI crude, which had risen alongside gold during the five-month fear-driven rally, declined separately as Iran talks progressed, reflecting a distinct demand-side dynamic rather than the shared geopolitical driver that had previously linked both commodities.
The divergence coincided with Fed Chair Warsh's scheduled appearance at a central bank gathering in Sintra, Portugal, which traders monitored for signals on Federal Reserve policy direction. The US dollar strengthened ahead of those remarks, adding pressure on dollar-denominated commodities including gold.
Sources: Oilprice, Cnbc TOP, Bloomberg Markets, Finnhub