Gold prices moved lower on Monday, pressured by a firmer U.S. dollar as ceasefire discussions between Washington and Tehran failed to produce a breakthrough, prompting investors to seek safety in the greenback.
The metal also faced headwinds from stronger-than-expected U.S. inflation data released on Friday, which reduced expectations for near-term interest rate cuts by the Federal Reserve.
Spot gold dropped 0.6% to $4,720.67 per ounce as of 01:06 ET (05:06 GMT), while gold futures slipped 0.9% to $4,743.20 per ounce.
Other precious metals followed suit, with spot platinum edging down to $2,047.06 per ounce and spot silver falling nearly 2% to $74.3975 per ounce.
Dollar gains amid stalled U.S.-Iran talks and Hormuz concerns
The U.S. dollar index rose about 0.4%, supported by safe-haven demand after negotiations between the U.S. and Iran ended without meaningful progress.
Lengthy discussions held in Pakistan over the weekend did little to ease tensions, as disagreements persisted over Iran’s nuclear programme, the status of the Strait of Hormuz, and Tehran’s backing of regional militant groups.
U.S. President Donald Trump responded by ordering a naval blockade of the Strait of Hormuz, later уточнив that the measure would specifically target Iranian ports and vessels.
The blockade, scheduled to begin at 10:00 ET (14:00 GMT), raises the risk of further military escalation. Iran has strongly rejected the proposed action.
Inflation surge adds to pressure on gold
Gold also came under pressure from U.S. consumer price data showing a notable rise in inflation during March, driven largely by higher energy costs linked to the conflict with Iran.
Annual CPI rose 3.3% in March, slightly below expectations of 3.4% but significantly higher than February’s 2.4%.
The figures heightened concerns that elevated oil and gas prices—fuelled by the conflict—could push inflation higher globally. The Strait of Hormuz, a critical energy transit route, has been largely closed since late February, and the planned U.S. blockade further reduces the likelihood of a near-term reopening.
Following the CPI release, market expectations for Federal Reserve rate cuts over the next year were scaled back further, according to CME FedWatch data. This outlook is generally negative for gold and other non-yielding assets, as higher rates tend to reduce their appeal.
Concerns over prolonged elevated rates have outweighed gold’s traditional safe-haven demand, while the metal’s strong rally through late 2025 has also dampened fresh buying interest.
U.S. producer price index data is scheduled for release later this week.