Gold prices edged lower on Monday, pressured by a firmer U.S. dollar after ceasefire negotiations between Washington and Tehran failed to deliver progress, prompting investors to shift toward the greenback as a safe-haven asset.
The metal was also dragged down by robust U.S. inflation data released on Friday, which dampened expectations for near-term interest rate cuts from the Federal Reserve.
Spot gold declined 0.6% to $4,720.67 per ounce as of 01:06 ET (05:06 GMT), while gold futures dropped 0.9% to $4,743.20 per ounce.
Other precious metals weakened as well, with spot platinum easing to $2,047.06 per ounce and spot silver falling nearly 2% to $74.3975 per ounce.
Dollar strengthens as U.S.-Iran tensions persist
The U.S. dollar index rose around 0.4%, supported by increased demand for safe-haven assets after talks between the U.S. and Iran ended without meaningful breakthroughs.
Extended discussions held in Pakistan over the weekend failed to ease tensions, with disagreements continuing over Iran’s nuclear program, the situation in the Strait of Hormuz, and Tehran’s backing of militant groups across the Middle East.
U.S. President Donald Trump responded by ordering a naval blockade of the Strait of Hormuz, later clarifying that the action would be directed specifically at Iranian ports and vessels.
The blockade, set to begin at 10:00 ET (14:00 GMT), raises the risk of further escalation. Iran has strongly opposed the move.
Inflation pressures add to gold’s downside
Gold also came under pressure following U.S. consumer price data showing a notable rise in inflation in March, largely driven by higher energy costs linked to the conflict.
Annual CPI increased to 3.3% in March, slightly below forecasts of 3.4% but significantly higher than the 2.4% recorded in February.
The data intensified concerns that elevated oil and gas prices—driven by the conflict—could push inflation higher globally. The Strait of Hormuz, a critical route for energy shipments, has remained largely closed since late February, and the planned U.S. blockade further dims prospects for a near-term reopening.
Following the CPI release, expectations for Federal Reserve rate cuts over the coming year were scaled back further, according to CME FedWatch data. This outlook tends to weigh on gold and other non-yielding assets, as higher interest rates reduce their appeal.
Concerns about prolonged elevated rates have overshadowed gold’s traditional role as a safe haven, while the metal’s strong rally into late 2025 has also limited fresh buying interest.
U.S. producer price index data is due later this week.
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