Gold Slides as Dollar Strengthens and Rate Hike Bets Mount Following Trump's Iran Remarks

Gold prices fell on Thursday as the U.S. dollar gained ground and expectations for higher interest rates increased, reactions spurred by President Donald Trump's statements regarding continued U.S. military action against Iran.\n\nBy 1:30 p.m. EDT, spot gold had declined 2.2% to $4,651.35 per ounce, retreating from a two-week high reached earlier in the session. Meanwhile, U.S. gold futures settled 2.8% lower at $4,679.70.\n\nThe appreciating dollar made bullion, priced in the greenback, more costly for investors holding other currencies. David Meger, director of metals trading at High Ridge Futures, noted that the market remains intently focused on Trump's comments, which provide little indication of a swift resolution to the energy supply concerns.\n\nThis dynamic is weighing on gold and silver, Meger added, as the likelihood of interest rate cuts diminishes. In a televised address, Trump asserted that U.S. military objectives in Iran were nearly met but offered no definitive timeline to conclude the month-long conflict, vowing instead to intensify bombardments.\n\nOil prices rose following the presidential remarks. Escalating energy costs typically translate into broader inflationary pressures, which in turn reduce central banks' flexibility to lower borrowing costs. Despite its traditional role as an inflation hedge, gold becomes less attractive when interest rates are high because it yields no return. Since the onset of the Middle East conflict on February 28, spot gold has lost 12% of its value.\n\nSentiment was further dampened by data showing the Turkish central bank's gold reserves decreased by 69.1 metric tons last week to 702.5 tons, marking a cumulative drop of over 118 tons in two weeks as authorities move to mitigate market turmoil from the war.\n\nIn Asian markets, gold began trading at a premium in India for the first time in two months, as lower prices stimulated demand. Conversely, premiums in China edged down slightly as buyers awaited a more substantial price correction.\n\nAmong other precious metals, spot silver fell 3.7% to $72.38. Platinum gained 0.9% to $1,981.95, while palladium rose 1.9% to $1,497.00.