Gold Prices Decline Amid Setbacks in US-Iran Diplomatic Efforts

Global Markets on Edge as US-Iran Peace Talks Stall

Gold prices edged lower in early trading, as efforts to resume peace talks between the US and Iran stalled, two months into a war that has upended global markets and raised inflation risks. The precious metal was near $4,685 an ounce, having given up 2.5% in the previous week.

The conflict in the Middle East has caused significant disruptions to the global energy supply, adding to inflation risks and raising the likelihood that central banks will keep interest rates steady for longer or even hike them. This development is a headwind for non-yielding bullion, which has lost about 11% in value since the conflict began at the end of February.

The Federal Reserve's path on borrowing costs is also being closely watched, following the news that US Attorney Jeanine Pirro is dropping an investigation into cost overruns at the US central bank. This development opens a path for Trump pick Kevin Warsh to become the next chair of the Federal Reserve. Investors expect Warsh to pursue a measured approach with gradual moves to lower rates, rather than the aggressive rate cuts urged by the president.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Market statistics for Monday morning include:

The Bloomberg Dollar Spot Index, a gauge of the US currency, gained 0.3% last week.