Gold Prices Retreat Amid Renewed Uncertainty Over US-Iran Diplomatic Reengagement

Global Markets Remain Volatile as US-Iran Peace Talks Stall

Gold prices have taken a hit as efforts to resume peace talks between the US and Iran remain at an impasse, two months into a war that's upended global markets and raised inflation risks. Bullion slipped below $4,700 an ounce on Monday after White House Press Secretary Karoline Leavitt announced that President Donald Trump had convened a meeting of national security officials to discuss an Iranian proposal.

The proposal, which came in the form of an interim deal, involves Tehran reopening the Strait of Hormuz in exchange for Washington ending its naval blockade. This development has added to inflation risks, raising the likelihood that central bankers will keep interest rates steady for longer or even hike them, a headwind for non-yielding bullion. The precious metal has lost about 10% since the conflict began at the end of February.

Despite a fragile ceasefire largely holding over the weekend, Trump on Saturday called off a planned trip by special envoys Jared Kushner and Steve Witkoff to Islamabad for round two of negotiations with Iran. Iranian President Masoud Pezeshkian stated that his nation won't enter "imposed negotiations under threats or blockade."

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The market's reaction to the ongoing conflict has been characterized as "headline roulette," with prices fluctuating wildly in response to each new development. As a result, conviction in the gold market remains thin, with larger allocations remaining sidelined. Physical demand is mixed, and the market can be described as "lost" at present.

The Bloomberg Dollar Spot Index slipped 0.1% on Monday as markets closed in New York.