TLDR
- Gold fell 2% to $4,664 per ounce after Trump pledged to hit Iran “extremely hard” in the next two to three weeks
- The drop snapped a four-day winning streak for gold futures
- Oil surged to $108 per barrel, lifting inflation expectations and strengthening the dollar
- UBS trimmed its average 2026 gold price forecast from $5,200 to $5,000, keeping the year-end target at $5,600
- Silver fell over 4%, while metals tariffs pushed aluminum prices near four-year highs
Gold prices dropped sharply on April 2 after President Donald Trump delivered a prime-time address pledging to escalate U.S. military operations against Iran.
Spot gold fell 2% to $4,664.39 per ounce, snapping a four-day winning streak. U.S. gold futures slid 2.5% to $4,691.10 per ounce.
Trump said the U.S. would hit Iran “extremely hard over the next two to three weeks.” He threatened to target Iran’s electric power plants and oil infrastructure if a deal was not reached.
“We’re going to bring them back to the stone ages, where they belong,” Trump said during the White House address on April 1.
Markets had been expecting a softer tone. Gold had been recovering after logging its worst month since October 2008 in March.
The speech quickly reversed that recovery. Dow futures fell more than 260 points shortly after Trump spoke. S&P 500 futures dropped 0.7% and Nasdaq 100 futures fell 0.8%.
Why Gold Fell on Escalation News
The drop surprised some investors. Geopolitical tensions usually push traders into gold as a safe haven. But this conflict has broken that pattern.
Trump’s comments sent oil prices surging. Brent crude rose 7.1% to $108.29 a barrel. West Texas Intermediate jumped from around $97 to over $113 in just hours.
Higher oil prices raise inflation expectations. That pushes Treasury yields and the dollar higher. Gold, which pays no yield, loses appeal when the dollar strengthens.
Iran’s Foreign Ministry responded the next day. “We are absolutely determined and resolute to continue our defense against this aggression,” a spokesperson said.
Silver fell 4.6% to $71.67 per ounce. Platinum dropped 2.5% to $1,914.61, and palladium shed 1.4% to $1,451.92.
UBS Cuts Gold Forecast
UBS trimmed its average gold price forecast for 2026 to $5,000 from $5,200, citing first-quarter adjustments.
UBS strategist Joni Teves said the coming weeks could bring “choppy price action” as markets continuously reassess geopolitical risks.
Teves kept the year-end gold target unchanged at $5,600.
On the metals front, Trump signed an order setting a 50% tariff on articles made entirely of aluminum, steel, or copper. Derivative articles substantially made of those metals face a 25% tariff rate.
Aluminum prices recently hit near four-year highs due to supply disruptions tied to the Middle East conflict.
Benchmark copper on the London Metal Exchange settled 0.8% higher at $12,434.50 a ton on Thursday.
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