Trump's speech sent gold prices plummeting! With interest rate cut dreams shattered, should investors buy the dip or sell at the top? The non-farm payrolls report comes on Good Friday.
2026-04-03 07:55:24
Spot gold prices fell sharply by 1.7% on Thursday (April 2), finally closing near $4,676 per ounce. Earlier in the session, prices had touched a two-week high of $4,800 before rapidly retreating, hitting a low of $4,554. U.S. gold futures fell even more, by 2.8%, closing at $4,679.70. The decline in gold prices was mainly driven by two factors: First, U.S. President Trump's tough stance on continuing heavy strikes against Iran without providing a timetable for ending the conflict caused oil prices to surge above $109, exacerbating inflation concerns, significantly reducing expectations of a Federal Reserve rate cut, and leading to a general decline in global stock markets. Many investors sold gold to cope with a liquidity crisis and the need to hold cash. Second, the strengthening of the U.S. dollar index to 100.02 made gold more expensive for non-dollar investors.
The core of the conflict stems from the latest remarks by US President Trump. In a televised address Wednesday evening local time (Thursday morning Beijing time), he stated that the US military had largely achieved its objectives in Iran, but did not provide a clear timetable for ending the more than month-long war. Instead, he vowed to "bomb Iran back to the Stone Age." This tough rhetoric quickly fueled market concerns about energy supplies, causing oil prices to surge. Brent crude prices soared by about 8% at one point, reaching above $109 per barrel, while US crude futures jumped 13% to above $112. This sharp rise in energy prices directly pushed up global inflation expectations, thereby limiting the room for interest rate cuts by central banks, especially the Federal Reserve.
Gold, as a classic hedge against inflation, should theoretically benefit from this. However, in a high-interest-rate environment, its non-interest-bearing nature significantly increases its holding costs, leading investors to favor other assets that generate returns. Market participants generally believe that despite the uncertainty brought by the conflict, the lack of clear signals of a peaceful resolution in Trump's rhetoric has further reduced market expectations for a rapid interest rate cut by the Federal Reserve, putting direct pressure on gold prices. Since the outbreak of the Middle East conflict on February 28, spot gold prices have fallen by approximately 12%, a drop far exceeding many analysts' initial forecasts.
Meanwhile, the actual impact of the conflict is spreading through global supply chains. Iran's de facto blockade of the Strait of Hormuz has disrupted approximately 20% of global oil shipments, putting upward pressure on prices for various commodities, from gasoline to chemicals and fertilizers. US labor market data shows that initial jobless claims unexpectedly fell to 202,000 last week, indicating continued economic resilience. However, economists warn that a prolonged war will drag down consumer spending and corporate hiring through rising energy costs and stock market volatility, posing a downside risk to economic growth. These macroeconomic factors have collectively created a "pressure net" suppressing gold prices.
Another major driver of the gold price decline was the sharp rise in the US dollar. Following Trump's remarks, risk aversion reignited in the market, but this safe haven flowed more towards strong currencies like the dollar than towards gold. Dollar-denominated gold became more expensive for investors holding other currencies, directly weakening international demand. The dollar index rose 0.46% on Thursday, closing at 100.02, a rebound that almost erased previous gains driven by optimistic expectations of war.
The bond market also corroborated this logic. US Treasury yields initially rose after Trump's speech but then fell, with the benchmark 10-year Treasury yield slightly retreating to 4.305% at the close. However, overall market expectations for a Fed rate cut have shrunk dramatically from 50 basis points before the conflict to only around 7 basis points. The FedWatch tool shows that investors are repricing the monetary policy path, and the high-interest-rate environment is clearly suppressing the value of gold, a non-interest-bearing asset.
David Meger, Director of Precious Metals Trading at High Ridge Futures, pointed out that the market is paying close attention to Trump's remarks, but these statements have so far shown no signs of a swift resolution to the energy situation, which is putting continuous pressure on gold prices. The strength of the US dollar and rising expectations of interest rate hikes are the core drivers of short-term downward pressure on gold. Even if geopolitical conflicts generate safe-haven demand, this demand is partly diverted to dollar assets with greater liquidity and yield advantages.
Globally, the Turkish central bank's actions further exacerbated the selling pressure on gold prices. The country's gold reserves plummeted by nearly 120 tons in the past two weeks, with a single-week decrease of 69.1 tons to 702.5 tons last week. This unprecedented reduction aims to mitigate the impact of the war on the domestic market, obtaining foreign exchange and lira liquidity through the sale or exchange of gold to stabilize the country's financial system. This move not only directly increased market supply but also sent a signal to investors that the central bank is "monetizing" its gold reserves, putting additional downward pressure on global gold prices.
Asian markets showed divergent reactions. In India, gold trading saw its first premium in two months, spurred by weaker prices, reflecting a recovery in physical demand and local investors' tendency to buy on dips. In China, however, the premium narrowed slightly, with buyers seemingly patiently awaiting a larger pullback. This regional divergence in demand highlights the resilience of the gold market after its recent high-level correction: while short-term selling pressure is heavy, long-term allocation demand has not completely disappeared.
Historically, geopolitical conflicts often initially drive up gold prices. However, if the conflict escalates into a protracted war of attrition, coupled with inflationary pressures from persistently high oil prices, gold's safe-haven appeal may be overshadowed by a high-interest-rate environment. The current US-Iran conflict has lasted for over a month. Iran has not only threatened broader attacks but has also retaliated against US-related data centers and other targets in the Gulf region. Simultaneously, it is negotiating a passage agreement in the Strait of Hormuz with Oman, attempting to reshape shipping rules through a "license" model. While these actions have exacerbated market uncertainty, they have also dashed investors' hopes for a "quick end" to the conflict, shifting their concerns to the dual risks of prolonged inflation and slowing economic growth.
The attacks on bridges and damage to the Pasteur Institute, reported by Iranian state media, further highlight that the conflict has extended from military targets to civilian and infrastructure sectors. This has not only heightened humanitarian concerns but also amplified the risk of global supply chain disruptions. Trump's posting of a video of the bridge bombing on social media, along with his statement that "more will follow," has further reinforced market expectations of escalation. Against this backdrop, gold is unlikely to escape the "safe-haven paradox under the pressure of high interest rates" in the short term.
However, it's important to note that the evolution of the conflict remains highly uncertain. If the Strait of Hormuz remains blocked for an extended period, keeping oil prices high and potentially triggering broader regional instability, gold's inflation-hedging properties may re-emerge in the medium to long term. Analysts generally believe that gold prices could rebound once expectations of interest rate cuts are rekindled or there are substantial signs of easing tensions. However, at the current juncture, the strength of the US dollar and the uncertainty surrounding the Federal Reserve's policy path remain the dominant forces.
In summary, the gold market in early April 2026 is caught in a complex interplay of geopolitical conflicts, inflation expectations, a strengthening US dollar, and interest rate trends. In the short term, downward pressure on gold prices remains. Investors should be wary of any unexpected developments in the Middle East over the weekend and the upcoming release of the US March non-farm payroll data —which will further guide market assessments of the economy and monetary policy. While many international financial markets are closed on Friday for Good Friday, and overseas gold trading will also be suspended, the escalating geopolitical risks over the weekend warrant close attention.
For long-term investors, gold's value as a diversification tool remains intact. In an era of heightened global uncertainty, its anti-inflation and safe-haven attributes remain strategically significant. However, in the current environment of high interest rates and a strong dollar, blindly chasing highs or excessive leverage is unwise. Investors are advised to consider their own risk appetite and look for opportunities to buy in batches when gold prices pull back to key support levels, while closely monitoring Federal Reserve policy signals, oil price movements, and any progress in Middle East peace negotiations.
The gold market is never isolated; it serves as a barometer of global macroeconomics and geopolitics. Whether this Middle East turmoil will ultimately transform into a safe-haven feast for gold depends on the duration of the conflict, the speed of energy supply recovery, and the shift in monetary policies of major economies. In any case, in the increasingly volatile year of 2026, rationality, patience, and diversification may be the best strategies for navigating the gold market's uncertainties.
Conflict Escalates: Trump's Tough Stance Ignites Both Fuel Prices and Inflation
The core of the conflict stems from the latest remarks by US President Trump. In a televised address Wednesday evening local time (Thursday morning Beijing time), he stated that the US military had largely achieved its objectives in Iran, but did not provide a clear timetable for ending the more than month-long war. Instead, he vowed to "bomb Iran back to the Stone Age." This tough rhetoric quickly fueled market concerns about energy supplies, causing oil prices to surge. Brent crude prices soared by about 8% at one point, reaching above $109 per barrel, while US crude futures jumped 13% to above $112. This sharp rise in energy prices directly pushed up global inflation expectations, thereby limiting the room for interest rate cuts by central banks, especially the Federal Reserve.
Gold, as a classic hedge against inflation, should theoretically benefit from this. However, in a high-interest-rate environment, its non-interest-bearing nature significantly increases its holding costs, leading investors to favor other assets that generate returns. Market participants generally believe that despite the uncertainty brought by the conflict, the lack of clear signals of a peaceful resolution in Trump's rhetoric has further reduced market expectations for a rapid interest rate cut by the Federal Reserve, putting direct pressure on gold prices. Since the outbreak of the Middle East conflict on February 28, spot gold prices have fallen by approximately 12%, a drop far exceeding many analysts' initial forecasts.
Meanwhile, the actual impact of the conflict is spreading through global supply chains. Iran's de facto blockade of the Strait of Hormuz has disrupted approximately 20% of global oil shipments, putting upward pressure on prices for various commodities, from gasoline to chemicals and fertilizers. US labor market data shows that initial jobless claims unexpectedly fell to 202,000 last week, indicating continued economic resilience. However, economists warn that a prolonged war will drag down consumer spending and corporate hiring through rising energy costs and stock market volatility, posing a downside risk to economic growth. These macroeconomic factors have collectively created a "pressure net" suppressing gold prices.
A stronger dollar and interest rate expectations: the "invisible killer" of gold.
Another major driver of the gold price decline was the sharp rise in the US dollar. Following Trump's remarks, risk aversion reignited in the market, but this safe haven flowed more towards strong currencies like the dollar than towards gold. Dollar-denominated gold became more expensive for investors holding other currencies, directly weakening international demand. The dollar index rose 0.46% on Thursday, closing at 100.02, a rebound that almost erased previous gains driven by optimistic expectations of war.
The bond market also corroborated this logic. US Treasury yields initially rose after Trump's speech but then fell, with the benchmark 10-year Treasury yield slightly retreating to 4.305% at the close. However, overall market expectations for a Fed rate cut have shrunk dramatically from 50 basis points before the conflict to only around 7 basis points. The FedWatch tool shows that investors are repricing the monetary policy path, and the high-interest-rate environment is clearly suppressing the value of gold, a non-interest-bearing asset.
David Meger, Director of Precious Metals Trading at High Ridge Futures, pointed out that the market is paying close attention to Trump's remarks, but these statements have so far shown no signs of a swift resolution to the energy situation, which is putting continuous pressure on gold prices. The strength of the US dollar and rising expectations of interest rate hikes are the core drivers of short-term downward pressure on gold. Even if geopolitical conflicts generate safe-haven demand, this demand is partly diverted to dollar assets with greater liquidity and yield advantages.
Central Bank Actions and Regional Demand: Türkiye's Reserve Reduction and Subtle Signals from the Asian Premium
Globally, the Turkish central bank's actions further exacerbated the selling pressure on gold prices. The country's gold reserves plummeted by nearly 120 tons in the past two weeks, with a single-week decrease of 69.1 tons to 702.5 tons last week. This unprecedented reduction aims to mitigate the impact of the war on the domestic market, obtaining foreign exchange and lira liquidity through the sale or exchange of gold to stabilize the country's financial system. This move not only directly increased market supply but also sent a signal to investors that the central bank is "monetizing" its gold reserves, putting additional downward pressure on global gold prices.
Asian markets showed divergent reactions. In India, gold trading saw its first premium in two months, spurred by weaker prices, reflecting a recovery in physical demand and local investors' tendency to buy on dips. In China, however, the premium narrowed slightly, with buyers seemingly patiently awaiting a larger pullback. This regional divergence in demand highlights the resilience of the gold market after its recent high-level correction: while short-term selling pressure is heavy, long-term allocation demand has not completely disappeared.
A double-edged sword amid conflict and uncertainty: safe-haven demand vs. inflation and interest rate suppression
Historically, geopolitical conflicts often initially drive up gold prices. However, if the conflict escalates into a protracted war of attrition, coupled with inflationary pressures from persistently high oil prices, gold's safe-haven appeal may be overshadowed by a high-interest-rate environment. The current US-Iran conflict has lasted for over a month. Iran has not only threatened broader attacks but has also retaliated against US-related data centers and other targets in the Gulf region. Simultaneously, it is negotiating a passage agreement in the Strait of Hormuz with Oman, attempting to reshape shipping rules through a "license" model. While these actions have exacerbated market uncertainty, they have also dashed investors' hopes for a "quick end" to the conflict, shifting their concerns to the dual risks of prolonged inflation and slowing economic growth.
The attacks on bridges and damage to the Pasteur Institute, reported by Iranian state media, further highlight that the conflict has extended from military targets to civilian and infrastructure sectors. This has not only heightened humanitarian concerns but also amplified the risk of global supply chain disruptions. Trump's posting of a video of the bridge bombing on social media, along with his statement that "more will follow," has further reinforced market expectations of escalation. Against this backdrop, gold is unlikely to escape the "safe-haven paradox under the pressure of high interest rates" in the short term.
However, it's important to note that the evolution of the conflict remains highly uncertain. If the Strait of Hormuz remains blocked for an extended period, keeping oil prices high and potentially triggering broader regional instability, gold's inflation-hedging properties may re-emerge in the medium to long term. Analysts generally believe that gold prices could rebound once expectations of interest rate cuts are rekindled or there are substantial signs of easing tensions. However, at the current juncture, the strength of the US dollar and the uncertainty surrounding the Federal Reserve's policy path remain the dominant forces.
Looking ahead: Rational choices for gold investors
In summary, the gold market in early April 2026 is caught in a complex interplay of geopolitical conflicts, inflation expectations, a strengthening US dollar, and interest rate trends. In the short term, downward pressure on gold prices remains. Investors should be wary of any unexpected developments in the Middle East over the weekend and the upcoming release of the US March non-farm payroll data —which will further guide market assessments of the economy and monetary policy. While many international financial markets are closed on Friday for Good Friday, and overseas gold trading will also be suspended, the escalating geopolitical risks over the weekend warrant close attention.
For long-term investors, gold's value as a diversification tool remains intact. In an era of heightened global uncertainty, its anti-inflation and safe-haven attributes remain strategically significant. However, in the current environment of high interest rates and a strong dollar, blindly chasing highs or excessive leverage is unwise. Investors are advised to consider their own risk appetite and look for opportunities to buy in batches when gold prices pull back to key support levels, while closely monitoring Federal Reserve policy signals, oil price movements, and any progress in Middle East peace negotiations.
The gold market is never isolated; it serves as a barometer of global macroeconomics and geopolitics. Whether this Middle East turmoil will ultimately transform into a safe-haven feast for gold depends on the duration of the conflict, the speed of energy supply recovery, and the shift in monetary policies of major economies. In any case, in the increasingly volatile year of 2026, rationality, patience, and diversification may be the best strategies for navigating the gold market's uncertainties.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
