Trump's Threats vs. Iran's Rejection Lead to Gold Plunge
Gold fell sharply on Tuesday (April 21), recording its biggest drop in more than two weeks, as the market awaited confirmation on whether Iran would join peace talks with the US before the ceasefire expires this week. Bullion prices fell as much as 2.6% after reports that Vice President J.D. Vance's trip to Islamabad was delayed because Tehran had not responded to the US negotiating position. A stronger dollar and rising Treasury yields also weighed on gold, given that the precious metal is priced in dollars and offers no yield.
Diplomatic tensions also escalated through statements from both sides. President Donald Trump said Iran had "no choice" but to send a delegation to Pakistan and that the US was ready to resume bombings if there was no breakthrough. From Tehran, Parliament Speaker Mohammad Bagher Ghalibaf asserted that Iran would not "negotiate under the shadow of threats." The impasse increases the risk of a further energy crisis as shipping through the Strait of Hormuz remains virtually halted amid a broader dispute over Iran's nuclear program and Israel's military operations in Lebanon.
Gold was also weighed down by policy pressure after Fed Chair nominee Kevin Warsh called for a new framework to address persistent inflation, without providing details. The market views Warsh as hawkish on inflation, making the chances of an aggressive rate cut as Trump wants slim, and potentially a more gradual path to interest rate cuts. The combination of geopolitical uncertainty and an unclear policy outlook makes gold vulnerable to repositioning and deleveraging.
At 2:36 p.m. New York time, spot gold fell 2.5% to US$4,701.49/oz. Silver fell 4.1% to US$76.49/oz, while platinum and palladium also weakened. The Bloomberg Dollar Spot Index rose 0.3%, highlighting additional currency pressure. (Arl)*
Source: Newsmaker.id
