Gold fell on Monday as the collapse of U.S.-Iran peace negotiations sent oil prices surging, rekindling inflation fears that weighed on bullion and pushed investors toward interest-bearing assets.
Spot gold fell 0.8% to $4,676.02 per ounce as of 0726 GMT, while U.S. gold futures for June delivery lost 1% at $4,684.50. U.S. President Donald Trump on Sunday rejected Iran’s response to a U.S. proposal for peace talks, dashing hopes for an imminent end to the 10-week conflict that has paralysed maritime traffic in the Strait of Hormuz and driven up global energy prices.
The dollar index rose 0.20% after Brent crude jumped 5% to trade above $105 per barrel. Higher crude oil prices and the stalled talks fuelled inflation worries, strengthening expectations of no rate cuts by the U.S. Federal Reserve this year.
“We’re essentially seeing an unwinding of hopes for an imminent deal, and gold is feeling the pinch from the renewed rise in crude prices,” said Tim Waterer, chief market analyst at KCM Trade.
The dynamic underscores an unusual market moment. Gold — traditionally a refuge during geopolitical stress — is instead being pulled lower by the inflationary consequences of the same conflict that might ordinarily lift it. With energy costs threatening to keep consumer prices elevated, central banks face less room to cut rates, reducing the relative appeal of non-yielding bullion.
March U.S. Consumer Price Index data showed headline inflation at 3.3% year-on-year, with market analysis suggesting that if energy costs are fully passed through, core inflation could remain near 3% — well above the Federal Reserve’s 2% policy target.
Goldman Sachs pushed back its forecast for Fed rate cuts to December 2026 and March 2027, from its previous expectation of cuts in September and December this year.
Gold ETF flows offer a counterbalancing signal, with global physical gold funds switching to net inflows of $6.6 billion in April, reversing the massive outflow trend of approximately $12 billion in March. Asian markets recorded their eighth consecutive month of net inflows.
“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.
