Gold fell after US President Donald Trump ratched up threats ahead of a deadline he’s imposed for Iran to re-open the Strait of Hormuz or face further attacks on civilian infrastructure.
Bullion dropped 0.5% after Trump said Iran might be “taken out” by Tuesday just after the Wall Street Journal reported the US military is making preparations for potential strikes on energy targets in Iran. The dollar trimmed losses and Treasury yields edged higher on Trump’s remarks, weighing on gold as it pays no interest and is priced in the greenback.
“The entire country can be taken out in one night, and that night might be tomorrow night,” Trump said in a Monday press conference at the White House, in an apparent reference to his ultimatum to Iran that expires Tuesday at 8 p.m.
Earlier, Iran rejected a proposed ceasefire and instead demanded a permanent end to the war, lifting of sanctions, and reconstruction efforts, in addition to protocol for safe passage through the waterway, according to state-run IRNA.
Gold has fallen more than 10% since the conflict started at the end of February, as spiking energy prices stoke inflation fears and dim the prospects for interest rate cuts that typically benefit the non-yielding precious metal. Bullion’s haven appeal has also been weakened by the need for investors to liquidate positions to cover other losses.
“People are taking chips off the table to protect their assets,” said Robert Gottlieb, a market commentator and former precious metals trader at JPMorgan Chase & Co.
A spike in US gasoline prices will be on full display when key US inflation data is released this week. Economists are forecasting a 1% increase in the consumer price index for March, which would be the sharpest one-month advance since 2022. The war has added more than $1 per gallon to prices at the pump.
Spot gold slipped 0.6% to $4,649.82 an ounce as of 2:45 p.m. in New York. Silver fell 0.2%, while platinum and palladium also declined. The Bloomberg Dollar Spot Index, a gauge of the US currency, fell 0.1%.
(By Yihui Xie and Yvonne Yue Li)
