Gold Falls Amid Rising Inflation Fears After Washington-Tehran Deal Stumbles

SadaNews - Gold fell after President Donald Trump rejected the latest Iranian peace offer to end the 10-week-long conflict that has disrupted navigation in the Strait of Hormuz, igniting inflation fears, while weekend clashes in the Middle East threatened the fragile ceasefire.

The precious metal traded near $4,673 per ounce after rising about 2% last week. Progress toward peace stalled again after Trump described the latest Iranian response to his proposal to end the conflict as "completely unacceptable."

This stalling could keep inflation risks high, alongside expectations that interest rates will remain elevated, which puts pressure on non-yielding gold.

The weekend attacks in the Middle East also highlighted the fragility of the ceasefire that began on April 8. A drone attack on Sunday briefly set a cargo ship ablaze off Qatar in Gulf waters. The UAE and Kuwait also reported intercepting hostile drones.

U.S. Inflation Data Under Scrutiny

Looking ahead, upcoming consumer price data expected on Tuesday is likely to confirm that inflation remains a threat in the U.S., following the largest monthly increase in March since 2022.

The term of the current Federal Reserve Chair Jerome Powell is set to end this week. His tenure has been marked by his resistance to political influence. Threats to the independence of the Fed have been a key factor contributing to gold's rise earlier this year.

Data released on Friday showed that U.S. employers added jobs for the second consecutive month in April, marking the first consecutive increase in nearly a year, while the unemployment rate remained steady at 4.3%.

This gives the Federal Reserve room to keep interest rates unchanged in the foreseeable future, while focusing on new inflationary risks arising from the war with Iran.

Spot gold fell 0.4% to $4,697.85 per ounce by 7:50 a.m. Singapore time. Silver also declined by 0.1% to $80.24. Both platinum and palladium dropped. The Bloomberg Dollar Spot Index, which measures the performance of the U.S. currency, rose by 0.1%.

Silver Price

Silver prices were also recorded near $80 per ounce.