Iran Conflict | After Trump's speech, the US dollar and oil prices rise, gold weakens

U.S. President Trump addressed the Iran issue, saying U.S. forces are close to completing Iran war objectives, but will continue to carry out strikes on Iran in the coming weeks. The dollar rose versus major currencies, reversing the prior two-day streak of declines. Oil prices continued to climb, while gold prices turned lower.

Trump said the conflict with Iran is about to end, but U.S. forces will continue to strike targets on the ground in the next two to three weeks.

Carol Kong, an FX strategy strategist at the Commonwealth Bank of Australia (CBA), said Trump’s remarks did not soothe the market. The market is beginning to realize that before tensions ease, the war is likely to further escalate. As the market recognizes that the global economy will slow significantly from current levels, the dollar against all major currencies will certainly rise further.

The U.S. Dollar Index, which measures the dollar’s performance against a basket of currencies, briefly climbed to a high of 99.925 after the speech, and the latest reading was 99.861, up 0.3%.

The euro was at $1.1554 versus the dollar, and the pound at $1.3254 versus the dollar. After Trump’s speech, both fell against the dollar by about 0.3%, giving back part of their recent gains. The Japanese yen weakened to 159.25 per dollar, but it still remained far from 160, an important psychological level seen as the threshold for intervention by Japanese authorities.

On gold, independent metals trader Tai Wong said that after a strong rally, gold prices pulled back because Trump’s wording was more forceful, mentioning an aggressive action plan in the coming weeks. This suggests that the optimism from the past few days may have been somewhat excessive, and ahead of the long weekend, gold prices could see a degree of correction.

Spot gold fell 1.3% to $4,694.48 per ounce; U.S. gold futures fell 1.9% to $4,723.7. Before Trump’s speech, gold had risen more than 1% and hit the highest level since March 19.

Spot silver also fell 2.9% to $72.95, platinum fell 1.8% to $1,928.26, and palladium fell 1.4% to $1,451.85.

In addition, Trump said that countries that obtain oil through the Strait of Hormuz should take the lead in ensuring the safety of ships, and he added that after the war ends, this waterway will “naturally” reopen to shipping.

Analysts and investors are closely watching when and how the Strait of Hormuz will be reopened to ease supply bottlenecks severely hitting Asian economies. After Trump’s speech, the June contract for Brent crude, LCOc1, rose more than 3% to $104.75 a barrel.