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Gold drops 2.8%, futures down 3.4% after Trump signals prolonged Iran campaign
In India, gold traded at a premium this week for the first time in two months as lower prices boosted demand.
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Gold prices dropped sharply from two-week highs on Thursday after US President Donald Trump said Washington would continue its military campaign in Iran in the coming weeks, lifting oil prices and dampening expectations of interest rate cuts.
Spot gold fell more than 2.8% to $4,622.59 per ounce as of 0719 GMT, after declining over 4% earlier and snapping a four-day winning streak. US gold futures slipped 3.4% to $4,649, Reuters reported.
The decline followed bullion’s rise to its highest level since March 19, prior to Trump’s remarks.
In India, gold traded at a premium this week for the first time in two months as lower prices boosted demand, while premiums in China edged down slightly as buyers waited for a deeper correction.
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Why the drop in gold prices?
This came as in a prime-time address, Trump said the US would carry out aggressive strikes on Iran and was nearing "completion of its main strategic objectives" in the conflict, disappointing investors who had hoped for clearer signs of de-escalation.
"It's (gold's slide) a clear reaction to (Trump's) address and the risk of escalation potentially over the weekend... that's pushed oil prices, U.S. dollar and yields higher, and naturally that's pushed the gold price quite meaningfully lower," said Kyle Rodda, a senior financial market analyst at Capital.com, according to the Reuters report.
The 10-year US Treasury yield and the dollar index both moved higher, putting pressure on dollar-denominated gold.
Also Read | US can ‘easily take' Iran oil, unsure if Americans have patience for war: Trump
Brent crude surged more than 6%
Meanwhile, Brent crude surged more than 6% after Trump indicated potential targeting of Iran’s energy infrastructure, raising concerns about supply disruptions.
Gold had fallen 11% in March, its worst monthly performance since 2008, following the outbreak of the Iran conflict on February 28. The jump in oil prices has heightened inflation concerns, complicating the Federal Reserve’s monetary policy outlook.
Expectations for US rate cuts remain subdued through most of 2026, with bets for a December cut dropping to just 12% from around 25% before Trump’s latest remarks.
While gold typically benefits during periods of inflation and geopolitical uncertainty, higher interest rates reduce its appeal by increasing the opportunity cost of holding the non-yielding asset.
Among other metals, spot silver fell 5.4% to $71.07 after earlier dropping more than 7%, platinum declined 3.1% to $1,902.65, and palladium lost 1.8% to $1,446.53.
