Gold prices dropped more than 1% on Thursday, snapping a four-day rally, after US President Donald Trump signalled that Washington would continue its military campaign in Iran for weeks without outlining a clear endgame.
Spot gold fell 1.3% to $4,694.48 an ounce by 0202 GMT, after earlier rising over 1% to its highest level since March 19. US gold futures slipped 1.9% to $4,723.70.
In a televised address, Trump said the United States would strike Iran “extremely hard” over the next two to three weeks, adding that core strategic objectives were close to being achieved. However, the absence of a clear timeline for ending the conflict dampened investor sentiment.
Analysts said the metal’s decline followed a strong two-day rally, with markets reassessing earlier optimism.
“Gold is pulling back after two superb days, as President Trump struck a notably aggressive tone on future military action,” said independent metals trader Tai Wong. “It suggests recent optimism may have been overdone, with some retracement likely ahead of the long weekend.”
Brent crude surged more than 4%, while the US dollar index and benchmark 10-year Treasury yields also rose, putting pressure on gold, which is priced in dollars.
Inflation concerns cloud Fed outlook
Gold has come under sustained pressure in recent weeks, falling 11% in March — its steepest monthly decline since 2008 — amid rising oil prices and inflation concerns triggered by the conflict, which began on February 28.
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Markets are now largely pricing in no change to US interest rates through most of 2026, with only a modest 25% probability of a cut by December.
St. Louis Federal Reserve President Alberto Musalem said on Wednesday there was no need to adjust the current policy stance despite mounting inflation risks.
Higher interest rates tend to weigh on gold by increasing the opportunity cost of holding the non-yielding asset, offsetting its traditional appeal as a hedge against inflation and geopolitical uncertainty.
Elsewhere, spot silver fell 2.9% to $72.95, platinum dropped 1.8% to $1,928.26, and palladium declined 1.4% to $1,451.85.
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