Ceasefire hopes dashed! Trump issues a "shocking" warning to Iran, gold prices plummet by $81

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On Thursday (April 2), spot gold prices suffered a sharp plunge. In a nationwide address, U.S. President Donald Trump said he would continue to attack Iran, triggering concerns about inflation and reigniting expectations of rate hikes. The U.S. dollar surged and oil prices skyrocketed.

Spot gold prices plunged by $81.28 on Thursday, down 1.71%, to $4,676.36 per ounce.

FXStreet analyst Christian Borjon Valencia said that as the U.S. dollar strengthened, gold prices fell by about 2% on Thursday. Earlier, President Trump revealed that military action against Iran would continue for two to three weeks, dashing hopes that the Middle East conflict would be resolved quickly. Traders are now turning their focus to Friday’s U.S. nonfarm payrolls employment report.

The U.S. Dollar Index (DXY), which tracks the dollar versus six major currencies, rose 0.46% on Thursday to 100.01. The dollar’s sharp rise makes gold priced in dollars more expensive for investors holding other currencies.

David Meger, Director of Precious Metals Trading at High Ridge Futures, said, “The market is highly focused on Trump’s remarks, but so far, these remarks have shown little sign that the energy situation can be resolved quickly. As a result, the likelihood of rate cuts is falling, which in turn weighs on gold prices.”

In his nationwide address, Trump said that the U.S. military’s military action in Iran has basically achieved its objectives, but he still did not provide a clear timeline for ending this month-long war, and he vowed to blast Iran back to the “Stone Age.”

Trump’s tough remarks sparked a surge in oil prices. West Texas Intermediate (WTI) jumped to above $111 per barrel, at one point nearing $114 per barrel.

Higher energy prices will push up overall inflation, thereby reducing the Federal Reserve’s room to cut rates. Although gold is seen as a tool to hedge against inflation, when interest rates are higher, gold often performs poorly because it itself does not pay interest.

Since the Middle East conflict broke out on February 28, spot gold prices have plummeted by 12%.

News that Turkey’s central bank reduced its holdings of gold also weighed on gold prices. To mitigate the impact of the war on the market, the Turkish central bank last week said its gold reserves fell by 69.1 tons to 702.5 tons; the cumulative drop over the past two weeks exceeded 118 tons.

Trump issues “harrowing” warning to Iran

U.S. President Donald Trump said that the war against Iran is “very close to being completed,” but he also hinted that strikes may escalate in the short term.

在 a rare speech during the golden hour on Wednesday local time, Trump described the war as a success, saying that military action has nearly achieved its stated goals, including destroying Iran’s ballistic missiles and drones, as well as the air force, navy, and industrial base. He said these actions will prevent Tehran’s proxy forces from undermining regional stability and cut off the country’s path to acquiring nuclear weapons.

Speaking in a roughly 20-minute address at the White House, Trump said, “Tonight I’m pleased to announce that these core strategic objectives are nearing completion.” He said, “We will finish this job, and we will finish it very quickly. We are very close.”

The remarks came as Trump tried to find an exit path for a conflict that is quickly spiraling out of control. However, some of his comments did not reassure the market—showing that the war would end quickly—but instead seemed to make investors uneasy. Trump’s remarks triggered a rise in crude oil, higher U.S. Treasury yields, a strengthening dollar, and falling U.S. stock index futures.

Trump also said that military action could escalate soon, adding, “Over the next two to three weeks, we will send them back to the Stone Age they belong in.”

Gold Trading Analysis

FXStreet analyst Christian Borjon Valencia noted that from a technical perspective, gold prices are building up momentum for further consolidation. Upside potential is capped by the 20-day simple moving average (SMA) at $4,780 per ounce, while downside potential is supported by the 100-day SMA at $4,632 per ounce. Given that the slope of the Relative Strength Index (RSI) is turning downward and has fallen below the neutral level of 50, market momentum appears to be leaning lower.

Valencia said that even so, gold rebounded on Thursday from the intraday low of $4,553 per ounce and moved above the 100-day SMA. But to sustain the bullish momentum, gold must break through the resistance created by the 20-day SMA. If it succeeds, the upward channel will open, and gold could move toward the $4,900 per ounce level, before facing resistance from the 50-day SMA at $4,948 per ounce.

（Spot gold daily chart Source: FXStreet）

Valencia added that on the downside, if gold weakens further, its first support would be the 100-day SMA, followed by the Thursday low. Once these support levels are broken, gold’s next target would be the $4,500 per ounce level, exposing the recent cycle low of $4,351 per ounce (the low on March 26).

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