On Monday, August 17, the memorandum between the United States and Iran expired after exactly 60 days, with no follow up agreement on the table. That same day, President Donald Trump told Fox News he would bomb Oman if the country got in the way of reopening the Strait of Hormuz. Oil prices immediately jumped to their highest level in weeks, with Brent climbing to $90.87 a barrel. Gold reacted too, but remarkably mildly, with spot gold rising less than one percent to around $4,417, well under the 2 percent daily threshold usually needed for a genuine price jump. Silver did better, climbing roughly 2 percent to above $66.
A truce that expired without a follow up
The memorandum signed by Washington and Tehran in early June gave both countries 60 days to reach a broader peace deal. That window has now expired without result. Trump told reporters at the White House he has no plans to extend it.
They want to make a deal, but they're not going to make the kind of a deal that I feel is necessary.
A few hours later, Trump went a step further in a phone interview with Fox News. Asked about the dragging talks between Oman and Iran over passage through the Strait of Hormuz, he said the United States would bomb Oman heavily if it got in the way. The White House offered no further clarification afterward. Oman has mediated the conflict between Washington and Tehran since it began, and had never before been threatened directly by the American president.
The US blockade keeps getting tighter
While diplomacy stalls, the US Navy has kept a blockade around Iran in place since July 14. This week a vessel was disabled for the third time. A US Navy helicopter fired two missiles into the engine room of the cargo ship Vela Nova, sailing under a Panamanian flag, which military command CENTCOM said was trying to reach an Iranian port despite repeated warnings.
Violence is also rising away from the blockade itself. This week two tankers flying the flag of the United Arab Emirates were attacked while trying to cross the Strait of Hormuz. Shipping traffic through the strait, normally responsible for roughly a fifth of the world’s oil transport, has now almost ground to a halt.
Tension is also rising on a second front
Away from the Strait of Hormuz, violence also flared between Israel and Lebanon. The Israeli military carried out its heaviest strikes on southern Lebanon last weekend since the late June truce, killing 11 people and wounding 19, according to Lebanon’s health ministry. Hezbollah threatened retaliation. Lebanese Prime Minister Nawaf Salam called the strikes a matter of the utmost gravity.
Why the gold price isn’t surging sharply
An escalating war suggests the gold price should automatically jump. This year that pattern has held less consistently. The oil price, rising on unrest around the Strait of Hormuz, also feeds fears of higher inflation, and that in turn pushes interest rates higher. Higher rates make savings products more attractive than gold, which pays no interest of its own. This week the flight to safety just barely wins out over that rate fear, partly because the US dollar fell to its lowest level in more than two months following a run of weak American data. Gold is climbing, but without the sharp jump you might expect from such a pile up of war headlines.
What this means if you want to sell old gold
For anyone looking to sell old gold, jewellery or coins, the core message stays the same as during earlier escalations this year. War headlines and threats do not automatically translate into a higher price, and waiting for the perfect moment is not a strategy. In early August, an apparent breakthrough around the Strait of Hormuz drove a price jump above $4,200, and that same arrangement is now stalled again. Anyone looking to sell old gold today would do well to check the current gold price at the moment of the actual appraisal, rather than betting on the next headline.
The gold price can move sharply within a single day based on geopolitical news. The weight and purity of your jewellery or coins do not change because of that, only the price you are offered for them today. A free, no obligation appraisal shows exactly what your pieces are worth right now.
The same lesson applies for anyone looking to sell silver, whether cutlery, jewellery or coins. Silver climbed more sharply than gold this week, moving above $66, a move driven mainly by the weaker dollar rather than the war threat itself.
In short
The memorandum between the US and Iran expired Monday without a follow up deal, Trump threatened the same day to bomb Oman, and the US Navy disabled a vessel trying to breach the blockade against Iran for the third time. Despite that pile up of escalations, the gold price reaction stayed under one percent, while silver performed somewhat better. For anyone looking to sell gold or silver, the lesson remains the same as in recent months, today’s price says little about tomorrow’s.