Gold prices eased at the start of the week as persistent inflation fears kept pressure on the US Federal Reserve’s rate outlook, while traders held their positions cautiously ahead of any breakthrough in US-Iran peace negotiations.
Spot gold was down around 0.3% to approximately $4,599 per ounce in early Asian trading on Monday, while US gold futures for June delivery fell 0.7% to $4,611.40. The metal has shed roughly 13% since the Iran war began in late February, as rising energy costs have inflated price pressures globally and dimmed expectations for interest rate relief.
“Gold is still feeling the lingering effects of last week’s hawkish Fed messaging, particularly the notable dissenting voices pushing back against further easing,” said Tim Waterer, chief market analyst at KCM Trade.
The Federal Reserve held interest rates unchanged at its meeting last week in a decision that effectively buried market hopes for any cut in 2026. The hawkish tone was reinforced over the weekend by senior policymakers. Federal Reserve Bank of Minneapolis President Neel Kashkari said the longer the Iran war continues, the greater the risks of higher inflation and economic damage, limiting how much forward guidance the central bank can responsibly offer. Chicago Fed President Austan Goolsbee described last week’s inflation data as “bad news” for the central bank, saying policymakers need to be cautious about easing until price pressures recede.
The concern is grounded in hard data. The US Personal Consumption Expenditures (PCE) Price Index jumped 0.7% in March, the largest monthly gain since June 2022, driven in significant part by elevated gasoline costs tied to the Hormuz disruption.
Rate Outlook Dims Gold’s Appeal
Higher interest rates reduce the attraction of gold, which pays no yield, as investors can earn competitive returns from assets such as US Treasury bonds. With the Fed signalling it will not move until inflation falls, the window for a meaningful gold rally remains narrow so long as oil prices stay elevated.
US President Donald Trump announced on Sunday that Washington would begin an effort dubbed “Project Freedom” to guide neutral ships out of the Strait of Hormuz as a humanitarian gesture. Iranian state media reported that Tehran was reviewing Washington’s response to Iran’s 14-point peace proposal, conveyed via Pakistan, raising cautious optimism on the diplomatic front. However, renewed attacks in the region, including Iranian drone strikes on energy infrastructure in the United Arab Emirates (UAE), quickly tempered any relief.
Now in its tenth week, the Middle East conflict has pushed energy prices sharply higher and intensified inflation risks, raising concerns that central banks may keep interest rates elevated for longer.
Precious Metals Broadly
Elsewhere in precious metals, spot silver edged 0.1% higher to $75.38 per ounce, platinum gained 0.2% to $1,991.85, and palladium fell 0.3% to $1,519.66. Gold speculators raised net long positions by 3,924 contracts to 91,574 in the week ended April 28, according to data cited in market notes, suggesting underlying bullish sentiment remains intact despite the near-term pressure.
Global gold demand reached a record high in the first quarter of 2026, with total demand including over-the-counter investment rising 2% year-on-year to 1,230.9 tonnes, according to the World Gold Council (WGC), which said quarterly demand in dollar terms surged 74% to a record $193 billion.
The direction of gold prices this week will be shaped primarily by how oil markets interpret any further development in US-Iran talks and whether the Fed receives data that justifies a shift in its current cautious stance.
