(Bloomberg) -- Gold prices fell after President Donald Trump said Iran “seems to be standing down,” easing fears of further hostilities that spurred the metal’s earlier rally.
Trump said no Americans were harmed by an Iranian missile attack on U.S. bases in Iraq early Wednesday. Iran’s restraint and Trump’s measured remarks in response suggest a path toward easing tensions with Tehran, which surged after the killing of a top general, Qassem Soleimani.
The precious metal earlier climbed above $1,600 an ounce, extending its rally to a six-year high, after Iran launched more than a dozen missiles at U.S.-Iraqi airbases. Palladium also soared to a fresh record.
Gold’s decline “is a reaction to the Iranian attack that now appears clearly to be a de-escalation, and Trump’s team seems to be clearly reading it that way,” said Tai Wong, the head of metals derivatives trading at BMO Capital Markets.
Gold futures for February delivery fell 0.9% to settle at $1,560.20 an ounce at 1:30 p.m. on the Comex in New York, snapping a 10-day advance with the largest drop in a month. A Bloomberg Intelligence gauge of big producers of the precious metal fell 1%.
“Gold essentially responded to risk-off environments,” Bart Melek, head of commodity strategy at TD Securities, said by phone on Wednesday, before Trump’s statement. “No American lives were lost, and the president was quite clear that if American lives were lost we would retaliate.”
Bullion’s blistering start to the year has been driven by the rising hostilities in the Middle East. Before that, the metal was already rallying as the Federal Reserve eased policy last year, governments added gold to reserves, and holdings in exchange-traded funds rose.
Silver futures also fell on the Comex, while platinum slid on the New York Mercantile Exchange. Palladium futures rose 2.3% to $2,061.40 an ounce after reaching $2,068.50, a record for a most-active contract.
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