Gold falls as Trump sends mixed signals on possible end to Iran war

The precious metal retreated after the US president delivered an ambiguous message on the conflict in the Middle East. Silver also posted a sharp decline, while oil climbed and the dollar strengthened.

Gold prices fell sharply after a closely watched address by US President Donald Trump failed to provide clarity on a possible resolution to the conflict in the Middle East, temporarily weakening the metal’s appeal as a safe-haven asset.

Spot gold dropped as much as 4.3%, snapping a four-session winning streak, after Trump said in his national address that the five-week war may be nearing an end, while also warning that the US-Israel alliance would strike Iran “extremely hard” over the next two to three weeks.

Rather than easing uncertainty, the speech left markets with more questions about the direction of the conflict. Iran, for its part, continued attacks across the Persian Gulf on Thursday and showed little willingness to begin negotiations, adding to volatility across global markets.

Gold, silver, oil and the dollar react to Middle East tensions

Following Trump’s remarks, equities declined, the US dollar strengthened and oil prices jumped as concerns remained over energy flows through the Strait of Hormuz, a critical waterway for roughly one-fifth of the world’s oil and liquefied natural gas trade.

In that environment, gold once again reflected a pattern seen throughout the conflict. While its traditional role as a safe haven would normally support prices, many investors have been forced to liquidate gold positions to cover losses elsewhere, limiting the metal’s upside.

Christopher Wong, a strategist at Oversea-Chinese Banking Corp., said Trump’s speech framed the conflict more as a military success story than a ceasefire announcement. According to Wong, although gold had earlier climbed to around $4,800 an ounce, that momentum may fade amid fears of a potential US ground operation in Iran.

Later on Thursday morning in the United States, gold pared some of its losses after a report said Iran was drafting a protocol with Oman to monitor traffic through the Strait of Hormuz, a development seen by some investors as a possible step toward containing further risks to energy trade.

Markets also weigh interest rates and economic risks

Trump’s remarks also affected expectations around monetary policy. After the US president had previously suggested that the United States could exit the conflict within two to three weeks, some traders had begun to bet that the Federal Reserve might need to cut interest rates if the war triggered a more prolonged economic slowdown.

However, rising oil prices and the inflation risks associated with them have once again put pressure on that view. A similar dynamic played out in March, when gold posted an almost 12% monthly decline, its worst performance since October 2008. At that time, inflation concerns linked to higher energy prices reduced the likelihood of lower borrowing costs, outweighing gold’s traditional haven appeal.

Another factor also shaped trading sentiment. With markets set to close for the Good Friday holiday, many investors sought to reduce exposure ahead of the long weekend, adding to downward pressure on precious metals.

By mid-afternoon in New York, spot gold was down 1.8% at $4,674.44 an ounce. Silver had fallen 3.1% to $72.74, while platinum and palladium moved higher. The Bloomberg Dollar Spot Index rose 0.3%.