Gold prices retreat as Trump signals continued Iran strikes

Gold prices retreated from two-week highs on Thursday as the United States signaled a continuation of military operations in Iran. This announcement pushed energy prices higher and dampened market hopes for near-term interest rate cuts. Spot prices fell 2% to $4,664.39 per ounce, snapping a four-day winning streak, while futures slid 2.5% to $4,691.10.

The market shift followed a televised address by President Donald Trump, who stated that the military would carry out aggressive strikes over the coming weeks as strategic objectives near completion. Independent metals trader Tai Wong noted the impact of the administration's bellicose tone on investor sentiment.

Gold is pulling back after two superb days, as President Trump was quite bellicose in his tone, referring to aggressive plans over the coming weeks... it suggests the optimism of the last few days was exuberant and there will be some retracement ahead of the long weekend.

Financial markets reacted swiftly to the news, with the 10-year Treasury yield and the dollar index both advancing, which pressured dollar-denominated bullion. Meanwhile, Brent Crude Oil surged by more than 6% after indications that energy infrastructure could be targeted, raising significant supply concerns.

The surge in oil prices has fueled inflation concerns, complicating the Federal Reserve's monetary policy outlook. Expectations for rate cuts remain low through 2026, with the probability of a December reduction falling to just 12%, down from 25% prior to the President's comments. While bullion typically benefits from geopolitical tension, higher interest rates increase the opportunity cost of holding the non-yielding asset.

Other precious metals also faced selling pressure during the session. Spot Silver fell 4.6% to $71.67, while Platinum dropped 2.5% to $1,914.61. Palladium also declined, shedding 1.4% to trade at $1,451.92.