Oil and gold drop after Trump says Iran 'standing down'

The price of oil fell sharply on Wednesday after US president Donald Trump said Iran was “standing down”.

In an address to the nation, Trump said Iran was backing off after a missile attack on US bases in Iraq overnight. The president said this was a “very good thing for the world”.

Oil had been drifting lower over the day and fell sharply on the president’s comments. Crude (CL=F) was down 4.4% to $59.90 (£45.52) per barrel at 5pm UK time and Brent (BZ=F) was down 3.8% to $65.64 per barrel.

Oil had rallied sharply in the days prior, amid fears about a possible conflict between the US and China that could disrupt supply.

‘Safe haven’ assets favoured by investors in uncertain times also sold off on Wednesday. Gold (GC=F) fell 1% to $1,558.40 an ounce and bitcoin (BTC-USD), which had been over 2% up on the dollar earlier in the day, dropped to trade flat against the greenback.

US stocks rallied. The S&P 500 (^GPSC), Dow Jones (^DJI), and NASDAQ (^IXIC) were all up 0.7% a piece shortly after the speech.

“The statement was in keeping with [Trump’s] tweet in response to the retaliatory attacks carried out by Iran overnight and for now investors can breathe a big sigh of relief,” said David Cheetham, a market analyst at trading platform XTB.

“It may be a little presumptuous to assume this is the end of the matter, with tensions no doubt set to linger, but the avoidance of any hints at further military action have calmed the market’s nerves.”

Tensions between the US and Iran have ratcheted up in recent weeks and reached boiling point last Friday after a US airstrike killed one of Iran’s most prominent generals. Iran’s leader pledged “revenge” in the wake of the attack. However, Iran’s foreign minister said Wednesday on Twitter Iran was not planning any further action following the missile attacks on US-Iraqi bases.

Despite signs of a de-escalation of military tensions, Trump said on Wednesday the US would be imposing additional “punishing” economic sanctions on Iran until the country “changes its behaviour”.