Gold prices fell after the highly anticipated speech from US President Donald Trump did not bring much clear signal about the possibility of ending the conflict in the Middle East.
The precious metal at one point fell by 2.3%, reversing the previous upward momentum, after Mr. Trump said the month-long conflict is approaching its end but the US will "attack Iran very strongly" in the next two to three weeks.
In his prime-time address, the US leader also affirmed that the military campaign has almost reached the set goals, and called on Middle Eastern oil-dependent allies to participate in resolving the near-closed situation of the Strait of Hormuz.
The stock market fell, the USD strength index increased by 0.3% and oil prices rebounded as concerns about energy flows through the Strait of Hormuz remained. This strategic route, before the war broke out, was a transit point for about 1/5 of global oil and liquefied natural gas. This development continues the trend that appeared during the conflict, when gold's shelter role weakened as investors had to sell to offset losses in other markets.
Mr. Christopher Wong - Strategy at OCBC Bank commented that Mr. Trump's speech basically saw the conflict as a military success rather than a ceasefire signal. He said that gold prices had previously had an impressive upward momentum to a high in the session of about 4,800 USD/ounce, but from this point on, the upward momentum may slow down due to reduced risk appetite amid concerns that the US may launch a ground offensive in Iran.
The sharp decline in Thursday threatened to end the four-session winning streak of gold. Previously, when Mr. Trump said the US could withdraw from Iran within two to three weeks, the market bet that the US Federal Reserve (Fed) may have to cut interest rates to support the economy amid rising risks of recession.
Gold prices fell nearly 12% in March, recording the strongest monthly decline since the 2008 Global Financial Crisis, as inflation risks due to rising oil prices reduced expectations of interest rate cuts, continuing to overwhelm the traditional safe haven role of precious metals.
As of the 13:03 trading session Vietnam time, spot gold price decreased by 4.24% to 4,582.45 USD/ounce. Silver decreased by 2.8% to 72.98 USD/ounce, while platinum and palladium also went down. Bloomberg Dollar Spot index increased by 0.2%.
