Gold plunges from 7-year high after Trump says Iran 'standing down'

Precious metal reached nearly $1,612 an ounce

Gold prices tumbled from seven-year highs Wednesday amid a de-escalation in the conflict between the U.S. and Iran.

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"Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world," President Trump said Wednesday from the White House, adding that the U.S. will impose sanctions on Tehran until it changes its behavior.

The yellow metal was trading down 0.9 percent at $1,560 an ounce at midday. It hit a near seven-year high of $1,613.30 after Iran attacked U.S. forces at two Iraqi bases Tuesday evening.

The attack was conducted to avenge the U.S. killing of Iranian Gen. Qassem Soleimani, blamed for masterminding the slayings of American troops in Iraq.

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Investors typically flock to gold during periods of geopolitical turmoil, since the metal holds its value when paper currencies are declining.

"This most often happens during wars or military escalations," Jeffrey Currie, global head of commodities at Goldman Sachs, wrote in a note to clients on Monday.

Owning gold is a “better hedge” than oil, he added.

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Gold has gained 2.3 percent since Soleimani’s death while Brent crude oil, the international benchmark, was down 0.3 percent.