Gold prices fell following a national address by U.S. President Donald Trump, which failed to outline a clear path toward resolving the Middle East conflict. After Trump stated that the month-long conflict was "nearing its end" but warned of "extremely severe strikes" against Iran within the next two to three weeks, gold dropped more than 3%, erasing earlier gains and briefly touching near $4,550 before recovering somewhat. Silver plunged over 6% during the session, U.S. stock futures declined, the U.S. dollar index rose 0.5% to climb back above the 100 level, while crude oil prices surged more than 7%.
Independent metals trader Tai Wong commented, "Gold is pulling back after two strong days because Trump's tone was quite hawkish, referring to aggressive plans in the coming weeks... This suggests the recent optimism was overdone, leading to some profit-taking ahead of the long weekend."
In his speech, the U.S. leader also indicated that military operations had largely achieved their stated objectives, while strongly urging allies reliant on Middle Eastern oil supplies to address the near-total blockade of the Strait of Hormuz. Market concerns persist regarding energy shipments through the Strait, a strategic waterway that carried one-fifth of global oil and liquefied natural gas shipments before the conflict. These market moves continue a pattern seen since the conflict began: gold's safe-haven appeal has diminished as investors sell the metal to cover losses in other markets.
Christopher Wong, a strategist at OCBC Bank, noted that Trump's speech "essentially declared a military victory rather than a ceasefire." He added, "Gold had performed exceptionally well recently, even reaching $4,800 intraday. From here, however, upside momentum may ease as markets worry about potential U.S. ground operations in Iran, which would dampen risk appetite."
Thursday's sharp reversal in gold threatened to end a four-day winning streak. With Trump signaling that U.S. forces could withdraw from Iran within two to three weeks, traders had previously been betting that the Federal Reserve might need to cut interest rates to counter a potential prolonged economic downturn.
Jun Bei Liu, chief portfolio manager at Ten Cap, suggested, "Thursday's sell-off could also be due to investors locking in profits ahead of the extended Easter holiday."
In March, gold fell nearly 12%, marking its worst monthly performance since October 2008. Inflation risks stemming from high oil prices diminished expectations for Fed rate cuts, once again overshadowing gold's traditional role as a safe-haven asset.
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