NAIROBI, Kenya — Gold prices fell on Monday as a lack of progress in US–Iran peace negotiations pushed oil prices higher, fueling concerns that elevated inflation could keep interest rates higher for longer and dampen demand for the non-yielding asset.
Spot gold fell 0.8pc to $4,678.39 per ounce as of 0407 GMT, while US gold futures for June delivery lost 0.9pc to $4,686.20, Reuters reported.
The dollar strengthened, making greenback-priced bullion more expensive for holders of other currencies and adding further pressure on gold.
US-Iran Peace Talks Break Down
US President Donald Trump on Sunday rejected Iran’s response to a US proposal for peace talks, dashing hopes for an imminent end to the 10-week-old conflict.
The war has caused widespread damage in Iran and Lebanon, paralyzed maritime traffic in the Strait of Hormuz, and driven up global energy prices.
“We’re essentially seeing an unwinding of hopes for an imminent (peace) deal, and gold is feeling the pinch from the renewed rise in crude prices,” said Tim Waterer, chief market analyst at KCM Trade.
Oil Surge Stokes Inflation Fears
Oil prices jumped as the Strait of Hormuz remained largely closed, keeping global energy supplies tight.
Rising crude prices risk pushing inflation higher, increasing the prospects of elevated interest rates.
While gold is traditionally seen as a hedge against inflation, high interest rates tend to weigh on the non-yielding asset.
The ongoing war with Iran and its shock to oil prices and supplies have rocketed to the top of the list of concerns for financial stability, according to a semi-annual Federal Reserve report released on Friday.
Fed Policy in Focus
Investors are now looking ahead to April’s US Consumer Price Index data, due later this week, for further clues on the Federal Reserve’s monetary policy direction.
China Gold Output Drops
Meanwhile, China’s gold production fell in the first quarter of 2026 from a year earlier, the China Gold Association said on Saturday, as safety inspections led some smelters to suspend production for maintenance.
“In the near-to-medium term, the $4,400 to $4,800 range still looks firmly in play while we remain in this ceasefire-without-a-peace-deal stalemate,” Waterer added.
Other Precious Metals
Spot silver bucked the trend, rising 0.4pc to $80.61 per ounce. Platinum slid 0.7pc to $2,041.66, and palladium was down 0.6pc at $1,482.46.
