Gold drops on Trump's Iran stance

April 02, 2026 (MLN): Gold prices slipped on Thursday as remarks by U.S. President Trump signaled that the United States would sustain its military operations in Iran in the weeks ahead.

The statement drove oil prices sharply higher and further reduced expectations for near-term interest rate cuts.

Currently, spot gold was down 0.95% at $4,635.78 an ounce as of [12:45 pm] PST, according to data reported by Mettis Global.

The decline came shortly after gold had climbed to its strongest level since March 19.

Financial markets reacted quickly to the geopolitical developments. U.S. Treasury yields rose, with the benchmark 10-year yield moving higher, while the dollar strengthened both factors weighing on gold, which is priced in dollars, according to Rueters.

The precious metal had already faced significant selling pressure last month, recording an 11% drop in March its steepest monthly decline since 2008 following the escalation of conflict involving Iran that began on February 28.

Recently, Brent crude futures went up by $4.99, or 4.90%, to $106.93 per barrel, according to data by Mettis Global.

Rising oil prices have intensified concerns about inflation, adding complexity to the Federal Reserve’s policy outlook.

As inflation risks grow, the likelihood of interest rate cuts has diminished.

Market expectations now suggest that rate reductions are unlikely for most of 2026, with the probability of a cut in December dropping to 12%, down significantly from around 25% prior to the latest geopolitical developments.

Although gold is often seen as a safe-haven asset during times of uncertainty and inflation, higher interest rates tend to limit its attractiveness by increasing the opportunity cost of holding a non-yielding asset.

Elsewhere in the metals market, silver dropped 4.6% to $71.67 per ounce, platinum declined 2.5% to $1,914.61, and palladium eased 1.4% to $1,451.92.

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