Gold Price Declines Amid Strengthening Dollar and Concerns Over Oil-Driven Inflation

Gold Prices Fall Amid Dollar Strength and Oil Price Rise

Gold prices slipped on Monday as a firm dollar and higher oil prices fueled concerns about inflation and interest rates. The U.S.-Iran peace talks remain stalled, casting a shadow over global markets.

Spot gold fell 0.3% to $4,694.26 per ounce as of 0059 GMT, marking a decline from last week's 2.5% loss that snapped a four-week winning streak. U.S. gold futures for June delivery also dropped 0.9% to $4,697.60.

The ongoing tensions between the U.S. and Iran continued to weigh on markets. U.S. President Donald Trump stated on Sunday that Iran could initiate a telephone call to negotiate an end to their two-month conflict, but stressed that Iran can never possess a nuclear weapon. Trump's remarks came after Tehran urged the U.S. to remove obstacles to a deal, including the blockade of Iran's ports.

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The cancellation of a trip by two U.S. envoys to Iran war mediator Pakistan on Saturday further complicated peace prospects, following the departure of Iran's foreign minister from Islamabad after speaking only to Pakistani officials. The stalled U.S.-Iran peace talks have disrupted Middle East energy exports, unsettling markets and policymakers ahead of a busy week of central bank meetings.

In contrast, gold premiums in India rose to their highest point in 2-1/2 months last week due to tightening supplies, while buying interest picked up in China. The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported a 0.2% decline in holdings to 966.30 metric tons on Thursday.

Investors are now awaiting the U.S. Federal Reserve's interest rate decision, set for Wednesday after its two-day meeting. The Fed's decision will likely influence gold prices, which have been sensitive to interest rate expectations.

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Meanwhile, other precious metals also posted declines, with silver, platinum, and palladium falling 0.3% to $75.48, $2,005.15, and $1,492.22 per ounce, respectively.