TLDR
- Spot gold declined 2% to $4,664 per ounce following President Trump’s announcement of imminent military escalation against Iran
- The decline ended a four-session rally in gold futures markets
- Crude oil prices jumped to $108 per barrel, boosting inflation concerns and dollar strength
- UBS reduced its 2026 average gold price projection from $5,200 to $5,000, maintaining a year-end target of $5,600
- Silver plummeted more than 4%, while new metals tariffs drove aluminum to near four-year peaks
Precious metals experienced a significant selloff on April 2 following President Donald Trump’s evening announcement detailing plans for intensified U.S. military action against Iran.
Spot gold tumbled 2% to settle at $4,664.39 per ounce, ending a four-session advance. Gold futures for U.S. delivery declined 2.5% to $4,691.10 per ounce.
During his address, Trump declared the U.S. would strike Iran “extremely hard over the next two to three weeks.” His warning included potential attacks on Iran’s electrical infrastructure and petroleum facilities unless diplomatic agreement could be reached.
“We’re going to bring them back to the stone ages, where they belong,” Trump declared during his April 1 White House remarks.
Investors had anticipated a more measured approach. Gold had been staging a comeback after recording its steepest monthly decline since October 2008 during March.
The president’s remarks immediately reversed the recovery trend. Dow futures plummeted over 260 points following Trump’s speech. S&P 500 futures retreated 0.7% while Nasdaq 100 futures shed 0.8%.
Why Gold Fell on Escalation News
The selloff caught many market participants off guard. Heightened geopolitical risk typically drives capital flows into gold as a protective asset. However, this particular situation has disrupted conventional market behavior.
Trump’s statements triggered a sharp rally in energy markets. Brent crude advanced 7.1% to $108.29 per barrel. West Texas Intermediate surged from approximately $97 to above $113 within hours.
Rising oil prices elevate inflation forecasts. This dynamic drives Treasury yields and dollar valuations higher. Gold, offering no income stream, becomes less attractive as dollar strength increases.
Iran’s Foreign Ministry issued a response the following day. “We are absolutely determined and resolute to continue our defense against this aggression,” a ministry representative stated.
Silver collapsed 4.6% to $71.67 per ounce. Platinum retreated 2.5% to $1,914.61, while palladium declined 1.4% to $1,451.92.
UBS Cuts Gold Forecast
UBS revised its average 2026 gold price projection downward to $5,000 from $5,200, reflecting first-quarter market adjustments.
UBS strategist Joni Teves indicated the upcoming weeks may deliver “choppy price action” as investors continually reevaluate geopolitical developments.
Teves maintained the year-end gold projection at $5,600.
In the base metals sector, Trump authorized an executive order establishing a 50% tariff on products manufactured entirely from aluminum, steel, or copper. Products substantially composed of these metals will face a 25% tariff.
Aluminum valuations recently approached four-year highs amid supply chain disruptions connected to Middle East hostilities.
Benchmark copper on the London Metal Exchange closed 0.8% higher at $12,434.50 per ton on Thursday.
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