Gold prices declined on Monday as renewed tensions surrounding stalled negotiations between Washington and Tehran intensified inflation concerns and reinforced expectations that US interest rates could remain elevated for longer, while a firmer US dollar added further pressure on bullion markets.
According to Bloomberg, spot gold traded near $4,674 per ounce, although prices remained historically elevated, after US President Donald Trump rejected Iran’s latest proposal aimed at ending the Middle East conflict, describing Tehran’s response as “completely unacceptable.”
The precious metal had gained nearly 2% last week amid heightened geopolitical tensions, elevated oil prices, and concerns over the stability of the fragile ceasefire that began on 8 April.
Weekend security incidents in the Gulf further weighed on market sentiment after a drone attack briefly ignited a commercial vessel off the coast of Qatar, while both the United Arab Emirates and Kuwait reported intercepting hostile drones.
Analysts noted that prolonged geopolitical instability could sustain inflationary pressures through higher energy costs, reducing the likelihood of near-term interest rate cuts by the Federal Reserve and weighing on non-yielding assets such as gold.
Market attention is now focused on upcoming US consumer inflation data expected Tuesday, following March’s strongest monthly inflation increase since 2022.
Priyanka Sachdeva, analyst at Philip Nova, said the latest US rejection of Iran’s proposal suggests Washington remains focused on curbing Tehran’s nuclear ambitions, increasing the risk of further escalation or prolonged diplomatic deadlock.
US labor market data released Friday also showed employers added jobs for a second consecutive month in April while unemployment held steady at 4.3%, giving the Federal Reserve greater room to maintain interest rates at current levels as it monitors inflation risks linked to the regional conflict.
Spot gold fell 0.9% to $4,673.92 per ounce during Asian trading hours, while silver edged up 0.2%. Platinum and palladium declined, as the Bloomberg Dollar Spot Index rose 0.2%.
As The Middle East Observer notes, gold markets remain caught between geopolitical uncertainty and persistent inflation fears, with investors increasingly assessing whether prolonged Middle East tensions and elevated energy prices could delay expected monetary easing by major central banks and sustain volatility across global financial markets.
