(April 2): Gold fell after US President Donald Trump said the US would hit Iran “extremely hard” over the next two to three weeks.
Bullion dropped as much as 2.3%, reversing an earlier gain, after Trump used a primetime address to praise US military success in Iran without announcing a ceasefire. Equities fell, a gauge of the US dollar rose and oil jumped as concerns lingered over energy flows through the Strait of Hormuz. The moves extended a scenario that has played out during more than a month of war as investors liquidate their gold positions to cover losses elsewhere.
Trump’s much-anticipated address “basically framed the conflict as a military success story, not a ceasefire announcement”, said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. “Gold had an impressive run-up to a US$4,800 intra-session high,” he said. “From here, the momentum may moderate given the possible curtailment of risk appetite on fears of a US ground operation in Iran.”
Though gold rebounded over the last few days, a near-12% decline in March was the metal’s worst monthly performance since October 2008. Inflationary risks stemming from high oil prices had reduced the prospect of lower borrowing costs, outweighing bullion’s traditional appeal as a haven.
Spot gold fell 1.3% to US$4,695.15 an ounce at 9.43am Singapore time. Silver dropped 2.7% to US$73.05. Platinum and palladium also fell. The Bloomberg Dollar Spot Index, a gauge of the US currency, rose 0.2%.
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