Gold Falls After Trump's Speech Amid Uncertainty Over the End of the War

SadaNews - Gold fell after a highly anticipated speech by U.S. President Donald Trump, which did not provide significant clarity on reaching a resolution to the war in the Middle East.

The precious metal dropped by as much as 2.3%, reversing earlier gains, after Trump stated that the month-long conflict is nearing its end, but he warned that the United States would strike Iran “very hard” in the next two to three weeks.

In a prime-time speech, the U.S. president also indicated that the military operation had nearly achieved its goals, while urging allies dependent on oil supplies from the Middle East to address the near-total closure of the Strait of Hormuz.

Trump's Speech Increases Uncertainty

Stocks fell, and the U.S. dollar index rose by 0.3%, while oil prices surged amid ongoing fears about energy flows through Hormuz, the strategic waterway that was, prior to the war, a transit point for one-fifth of the world’s oil and liquefied natural gas.

These movements followed a pattern that has recurred throughout the conflict, where gold's appeal as a safe haven diminished due to the need for investors to liquidate positions and cover losses elsewhere.

Christopher Wong, a strategist at "Oversea-Chinese Banking Corporation", stated that "the speech portrayed the conflict primarily as a military success story, rather than a ceasefire announcement."

He added: "Gold had a strong rally reaching $4,800 during the session." He continued, "From here, momentum may slow down due to the potential decrease in risk appetite prompted by fears of a U.S. ground operation in Iran."

Shifts in Interest Rate Expectations Pressure Precious Metal

The sudden drop in gold prices on Thursday threatened to break a four-day winning streak. With Trump already confirming that the U.S. could leave Iran within a timeframe of two to three weeks, traders wagered that the Federal Reserve might be forced to cut interest rates to support a potential long-term economic slowdown.

Despite gold recovering over the past few days, its drop of about 12% in March marked its worst monthly performance since October 2008. Inflation risks stemming from rising oil prices have diminished the likelihood of borrowing cost reductions, overshadowing gold's traditional appeal as a safe haven.

Spot gold fell by 1.2% to $4,703.18 per ounce at 10:07 AM Singapore time. Silver decreased by 2.8% to $72.98. Both platinum and palladium also declined. The Bloomberg dollar index, a measure of the U.S. currency, rose by 0.2%.