Gold Falls, Dollar Strengthens as Trump Toughens Iran Stance
Gold prices plunged nearly 4% to around $4,600 per ounce on Thursday (April 2), snapping a four-day rally, after the US dollar and oil prices surged following US President Donald Trump's pledge to escalate attacks on Iran.
Trump's comments were seen as heightening inflation risks and reinforcing expectations of higher interest rates, putting pressure on non-yielding gold.
In his speech on Wednesday, Trump stated that the US was "close to achieving" its military objectives in Iran, but offered no clarity on when the month-long conflict would end. Instead of providing a timeline for ending the war, he asserted that the US would hit Iran "very hard" in the next "two to three weeks," triggering a renewed increase in geopolitical and energy risk premiums in the market.
From Iran, Tehran rejected Trump's claim that Iran had requested a ceasefire and insisted that the Strait of Hormuz remains under the control of the IRGC Navy. The strengthening of the dollar, a safe-haven asset, also pressured dollar-denominated gold. Since the conflict began on February 28, gold has fallen by around 13%, signaling a shift in sentiment from hedging to liquidation pressure as the dollar and interest rate expectations strengthen.
Source: newsmaker.id
