Gold Prices Drop as Trump Escalates Iran Threats, Oil Surges

Gold prices retreated Thursday, breaking a multi-day winning streak after President Donald Trump signaled an intensified military campaign against Iran over the coming weeks. The remarks rattled investors who had grown cautiously optimistic about potential de-escalation in the region.

Trump warned that the United States would strike Iran aggressively within the next two to three weeks, stating Washington was close to achieving its objectives while claiming Iran's naval and missile capabilities had already been largely neutralized. The hawkish address dampened hopes for a swift resolution to the conflict and triggered a sharp reversal across financial markets.

Spot gold fell roughly 2% to around $4,665 per ounce, while U.S. gold futures dropped approximately 2.5% to $4,692 per ounce. The selloff was driven largely by surging oil prices and a strengthening U.S. dollar, both of which typically pressure gold. Brent crude futures climbed over 7% to approximately $108 per barrel, as Trump's comments stoked fears of prolonged supply disruptions through the Strait of Hormuz.

Senior economist José Torres of Interactive Brokers noted that Trump's combative tone — which sent crude prices soaring from around $97 to over $113 overnight — caught markets off guard, particularly those expecting diplomatic signals.

UBS strategist Joni Teves cautioned that gold could see choppy price action in the near term as markets continuously adjust to geopolitical developments. The bank revised its average annual gold price forecast slightly lower to $5,000 from $5,200, though it maintained its year-end target of $5,600, citing continued investor demand for portfolio diversification.

Silver dropped over 3% to around $72.66 per ounce, while platinum edged up 0.6%. In base metals, the Trump administration's expanded Section 232 tariffs on steel, aluminum, and copper drew attention, with aluminum prices near four-year highs amid ongoing Middle East supply disruptions.