Gold price slides as Trump gives mixed signals on Iran war resolution

Gold declined after a much-anticipated address by US President Donald Trump offered little clarity on a resolution to the war in the Middle East. Silver also fell sharply.

Spot gold fell as much as 4.3%, breaking a four-day winning streak, after Trump said in Wednesday’s speech to the nation that the five-week conflict was nearing completion, but the US-Israel alliance would hit Iran “extremely hard” over the next two to three weeks. Iran, for its part, continued attacks across the Persian Gulf on Thursday and showed little appetite to start talks.

Equities fell, a gauge of the US dollar rose as much as 0.5% and oil jumped as concerns lingered over energy flows through Hormuz, the key waterway that’s normally a transit point for a fifth of the world’s oil and liquefied natural gas. The moves extended a scenario that has played out during the conflict, with gold’s haven appeal dulled by the need for investors to liquidate their positions and cover losses elsewhere.

Trump’s speech “basically framed the conflict as a military success story, not a ceasefire announcement,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. While gold earlier edged up to about $4,800 an ounce, “the momentum may moderate given the possible curtailment of risk appetite on fears of a US ground operation in Iran.”

The precious metal pared some losses late morning Thursday in the US after a report that Iran is drafting a protocol with Oman to monitor traffic through the Strait of Hormuz.

With Trump already having said the US could leave Iran within a two- to three-week timeframe, traders had earlier bet that the Federal Reserve may need to cut interest rates to shore up a possible longer-term economic downturn. The market will be closed for the Good Friday holiday and a desire to minimize risks ahead of the long weekend is likely to dominate trading, OCBC’s Wong said.

A near 12% decline in March was bullion’s worst monthly performance since October 2008 as inflationary risks stemming from elevated oil prices reduced the prospect of lower borrowing costs, again outweighing gold’s traditional appeal as a haven.

Spot gold fell 1.8% to $4,674.44 an ounce as of 3:15 p.m. in New York. Silver slid 3.1% to $72.74, while platinum and palladium rose. The Bloomberg Dollar Spot Index rose 0.3%.

(By Yihui Xie)