Gold and Silver on a Discount. Platinum and Palladium Lose to Market Uncertainty

The metals market evaluates Trump’s address
The metals discount accelerates at the beginning of April

The metals market evaluates Trump’s address

Metal prices fell after Donald Trump delivered his State of the Union address, which, contrary to widespread expectations, did not provide new information on the Middle East conflict.

The President of the United States stated that the conflict is nearing its end, but in the next two or three weeks the USA will strike Iran “with great force.”

The Republican believes that American forces have “achieved their objectives,” and allies dependent on Middle Eastern oil should address the burning problem of the Strait of Hormuz.

Read more about this in the article: Dollar and euro rates react to US threats. Trump’s address directly wakes up from an American dream

Gold and silver fell to a discount during the five‑week war, forcing investors to rethink their investment strategies.

Analysts from ING Think highlighted that the drop in gold price of almost 12% in March was the worst monthly result since October 2008.

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Trump’s speech combined with rising risk of interest rate hikes in the United States also caused a collapse in platinum and palladium prices.

Federal Reserve Chair Jerome Powell said at the beginning of the week that “long‑term inflation expectations appear to be under control.”

Powell, at a Harvard University event, added that the central bank may be forced to act in response to the conflict’s effects, but it is not necessary at the moment.

“We do not know, what the economic consequences will be,” he said, emphasizing that Fed policy “allows for a waiting stance.”

A key element of the market turbulence that followed the US and Israel attack on Iran is the sharp spike in oil prices.

Inflationary pressure, which can weaken both consumer demand and economic growth, poses a serious challenge for Fed policymakers.

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“We usually ignore all kinds of supply shocks, but the key aspect here is careful monitoring of inflation expectations,” Powell said.

Michał Stajniak, Deputy Director of XTB’s Analysis Department, said in an interview with FXMAG that “the key aspect in forecasting levels for gold and silver is the inflation aspect, interest rates, and further risk.”

With a clear rise in inflation, interest rates may return to increases, which could suggest a further drop in prices.

Conversely, a sudden rise in risk, e.g., a strong escalation in the Middle East (e.g., ground invasion or direct attacks on tankers), can lead to a sell‑off of assets across the market, including gold.

The expert also emphasized that a rebound later could be driven by a “drop in the risk of rising inflation and a slight calming of the Middle East situation, with tension maintained.”

Read more about this in the article: Gold price fell 12%, soon further discount? Expert: “With possible de‑escalation there is a chance to recover losses”

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Also see: Gold price fell 15%, silver still negative. Discount has not been seen since 1983