Key Takeaways
- Precious metal prices declined 2% to $4,664 per ounce following Trump’s announcement of planned aggressive action against Iran within weeks
- The decline ended four consecutive sessions of gains for gold futures contracts
- Crude oil prices jumped to $108 per barrel, driving inflation concerns higher and boosting dollar strength
- UBS analysts reduced their average 2026 precious metal price projection from $5,200 to $5,000, maintaining year-end expectations at $5,600
- Silver experienced a sharper decline exceeding 4%, while tariff measures pushed aluminum valuations near their highest levels in four years
Precious metal valuations experienced a significant decline on April 2 following President Donald Trump’s televised announcement outlining plans for intensified military action targeting Iran.
Spot prices for the yellow metal retreated 2% to $4,664.39 per ounce, ending four consecutive days of positive momentum. U.S. futures contracts declined 2.5% to settle at $4,691.10 per ounce.
During his address, Trump indicated the United States would strike Iran “extremely hard over the next two to three weeks.” His remarks included threats targeting 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 stated during the April 1 White House announcement.
Investors had anticipated a more measured approach. Gold had been staging a comeback following its steepest monthly decline since October 2008 in March.
The president’s remarks immediately halted that rebound. Dow futures plummeted more than 260 points in the aftermath. S&P 500 futures retreated 0.7% while Nasdaq 100 futures dropped 0.8%.
The Counterintuitive Market Reaction
The selloff caught many market participants off guard. Rising geopolitical uncertainty typically drives investors toward the precious metal as a protective asset. However, this particular situation has defied conventional wisdom.
Trump’s threatening language caused crude oil valuations to spike. Brent crude advanced 7.1% to $108.29 per barrel. West Texas Intermediate rocketed from approximately $97 to above $113 within mere hours.
Rising oil prices amplify inflation concerns. This dynamic elevates Treasury yields and strengthens the dollar. The precious metal, which generates no income, becomes less attractive when dollar valuations increase.
Iran’s Foreign Ministry issued a response the following day. “We are absolutely determined and resolute to continue our defense against this aggression,” a spokesperson declared.
Silver valuations tumbled 4.6% to $71.67 per ounce. Platinum retreated 2.5% to $1,914.61, while palladium decreased 1.4% to $1,451.92.
UBS Revises Precious Metal Outlook
UBS revised its average precious metal valuation forecast for 2026 downward to $5,000 from $5,200, reflecting first-quarter market developments.
UBS strategist Joni Teves projected the upcoming weeks might deliver “choppy price action” as financial markets continuously reevaluate geopolitical risk factors.
Teves maintained the year-end valuation target at $5,600 without modification.
Regarding industrial metals, Trump executed an executive order imposing a 50% tariff on products manufactured entirely from aluminum, steel, or copper. Products substantially composed of these metals face a 25% tariff assessment.
Aluminum valuations recently reached near four-year peaks due to supply chain disruptions connected to Middle Eastern hostilities.
Benchmark copper on the London Metal Exchange closed 0.8% higher at $12,434.50 per ton on Thursday.
