Key Takeaways
- Gold declined 2% to $4,664 per ounce following President Trump’s announcement of imminent aggressive action against Iran within two to three weeks
- The decline ended a four-session rally in gold futures markets
- Crude oil prices jumped to $108 per barrel, raising inflation concerns and bolstering dollar strength
- UBS reduced its 2026 average gold price projection from $5,200 to $5,000, while maintaining its year-end forecast at $5,600
- Silver plunged more than 4%, and aluminum reached nearly four-year peaks amid metals tariff implementation
The precious metal market experienced a significant downturn on April 2 following President Donald Trump’s evening speech in which he announced plans to intensify U.S. military engagement against Iran.
Spot gold tumbled 2% to $4,664.39 per ounce, ending four consecutive sessions of gains. Gold futures traded in the United States declined 2.5% to $4,691.10 per ounce.
During his address, Trump declared the United States would strike Iran “extremely hard over the next two to three weeks.” His warnings included potential strikes on Iran’s electrical grid and petroleum facilities should negotiations fail.
“We’re going to bring them back to the stone ages, where they belong,” Trump said during the White House address on April 1.
Investors had anticipated a more moderate approach. Gold had been staging a comeback following its steepest monthly decline since October 2008 during March.
Trump’s remarks immediately halted this rebound. Dow futures plummeted over 260 points in the aftermath of his speech. S&P 500 futures declined 0.7% while Nasdaq 100 futures retreated 0.8%.
The Unexpected Gold Selloff Explained
Many market participants found the decline counterintuitive. Rising geopolitical uncertainty typically drives investors toward gold as a protective asset. However, this particular situation has defied conventional wisdom.
The president’s statements triggered a massive rally in crude oil. Brent crude climbed 7.1% to reach $108.29 per barrel. West Texas Intermediate surged from approximately $97 to exceed $113 within mere hours.
Elevated oil prices amplify inflation projections. This dynamic elevates Treasury yields and strengthens the U.S. dollar. Since gold generates no income, it becomes less attractive when the greenback gains momentum.
Iran’s Foreign Ministry issued a response the following day. “We are absolutely determined and resolute to continue our defense against this aggression,” a spokesperson declared.
Silver experienced a 4.6% drop to $71.67 per ounce. Platinum declined 2.5% to $1,914.61, while palladium fell 1.4% to $1,451.92.
UBS Revises Gold Price Outlook
UBS downgraded its 2026 average gold price projection to $5,000 from a previous estimate of $5,200, reflecting first-quarter market developments.
According to UBS strategist Joni Teves, the market should prepare for “choppy price action” in the weeks ahead as investors constantly reevaluate geopolitical developments.
Despite the revised average, Teves maintained the firm’s year-end gold projection at $5,600.
In related metals news, Trump authorized a directive implementing a 50% tariff on products manufactured entirely from aluminum, steel, or copper. Products predominantly composed of these metals will face a 25% tariff.
Aluminum valuations recently approached four-year peaks driven by supply chain constraints linked to the Middle East crisis.
Benchmark copper traded on the London Metal Exchange closed 0.8% higher at $12,434.50 per ton on Thursday.
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