Gold Prices Decline Amid Trump's Hesitant Approach to Iran Conflict Resolution

Global Markets React to US President Trump's Address on Middle East Conflict

Gold prices declined sharply after US President Donald Trump's highly anticipated address offered little clarity on a resolution to the ongoing war in the Middle East. Bullion fell as much as 2.3%, reversing an earlier gain, after Trump stated that the month-long conflict was nearing completion but that the US would inflict significant damage on Iran over the next two to three weeks.

The address, delivered in a primetime speech, also stated that the military operation had nearly achieved its military goals, while urging allies who rely on Middle Eastern oil supplies to resolve the near-closure of the Strait of Hormuz. The strategic waterway, which was a transit point for a fifth of the world's oil and liquefied natural gas, continues to be a concern, leading to a surge in oil prices and a rise in the US dollar.

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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. The sudden reversal on Thursday threatened to snap a four-day winning streak for gold, which had been on an impressive run-up to a $4,800 intra-session high.

Spot gold fell 1.2% to $4,703.18 an ounce at 10:07 a.m. Singapore time, while silver slid 2.8% to $72.98. The decline in bullion and other precious metals was also reflected in the near-12% decline in March, which was bullion's worst monthly performance since October 2008. The inflationary risks stemming from elevated oil prices reduced the prospect of lower borrowing costs, again outweighing gold's traditional appeal as a haven.