Key Takeaways
- Gold declined 2% to $4,664 per ounce following Trump’s announcement of imminent aggressive action against Iran within two to three weeks
- The decline ended a four-session rally for precious metal futures
- Crude oil jumped to $108 per barrel, raising inflation concerns and boosting the U.S. dollar
- UBS reduced its 2026 average gold price projection from $5,200 to $5,000, maintaining its year-end estimate at $5,600
- Silver plummeted more than 4%, while tariffs on industrial metals drove aluminum to nearly four-year peaks
Precious metals experienced a significant selloff on April 2 following President Donald Trump’s evening announcement outlining plans to intensify military engagement with Iran.
Spot gold declined 2% to $4,664.39 per ounce, ending a four-session advance. Gold futures traded in the U.S. decreased 2.5% to $4,691.10 per ounce.
The president announced that military strikes against Iran would commence “extremely hard over the next two to three weeks.” His remarks included warnings about potential attacks on Iran’s electrical infrastructure and petroleum facilities should diplomatic negotiations fail.
“We’re going to bring them back to the stone ages, where they belong,” Trump declared during his April 1 White House statement.
Investors had anticipated a more measured approach. Gold had been staging a comeback after experiencing its steepest monthly decline since October 2008 during March.
The president’s address immediately halted that momentum. Dow futures plunged over 260 points in the aftermath of Trump’s remarks. S&P 500 futures retreated 0.7% while Nasdaq 100 futures declined 0.8%.
The Counterintuitive Gold Reaction Explained
The selloff caught many market participants off guard. Rising geopolitical risk typically drives investors toward gold as a protective asset. However, this situation has defied conventional market behavior.
Trump’s warnings triggered a substantial rally in energy markets. Brent crude advanced 7.1% to $108.29 per barrel. West Texas Intermediate crude soared from approximately $97 to surpass $113 within mere hours.
Elevated oil prices increase inflation projections. This dynamic pushes Treasury yields and the U.S. dollar upward. Gold, which generates no income, becomes less attractive when dollar strength accelerates.
Iran’s Foreign Ministry issued a statement the following day. “We are absolutely determined and resolute to continue our defense against this aggression,” according to a ministry representative.
Silver tumbled 4.6% to $71.67 per ounce. Platinum retreated 2.5% to $1,914.61, while palladium declined 1.4% to $1,451.92.
Investment Bank Lowers Gold Price Projection
UBS revised downward its average 2026 gold price estimate to $5,000 from $5,200, reflecting first-quarter market developments.
UBS strategist Joni Teves indicated the upcoming period may feature “choppy price action” as financial markets repeatedly evaluate shifting geopolitical threats.
Teves maintained the unchanged year-end gold projection at $5,600.
Regarding industrial metals, Trump authorized an executive order implementing a 50% tariff on products manufactured entirely from aluminum, steel, or copper. Items substantially composed of these metals will face a 25% tariff assessment.
Aluminum valuations recently reached nearly four-year peaks amid supply chain interruptions connected to Middle Eastern hostilities.
Benchmark copper traded on the London Metal Exchange closed 0.8% higher at $12,434.50 per ton on Thursday.
