Gold Slumps to One-Month Low

Gold plunged more than 2% to $4,570 per ounce on Tuesday, hitting its lowest level since late March, as surging oil prices and stalled US-Iran negotiations intensified inflation concerns ahead of key central bank decisions. A US official revealed that President Donald Trump rejected Iran’s latest proposal to resolve the two-month conflict, dimming hopes for a swift resolution to the energy supply disruptions that have fueled inflationary pressures, and, in turn, the likelihood of higher interest rates. While gold is traditionally viewed as an inflation hedge, rising rates diminish its appeal as a non-yielding asset. The US Federal Reserve is expected to hold interest rates at what may be Jerome Powell’s final meeting as chair, with investors watching closely for clues on future policy shifts. Meanwhile, the Bank of Japan held rates steady in a split decision, while other major central banks are also expected to stand pat this week but to adopt a more hawkish tone.

Gold fell toward $4,600 an ounce on Tuesday, extending losses from the previous session as investors assessed renewed diplomatic efforts to resolve the US–Iran conflict, which has triggered a historic energy supply shock and intensified inflation concerns. Tehran reportedly delivered a fresh proposal to Washington through Pakistani mediators, offering to reopen the Strait of Hormuz if the US lifts its blockade, while deferring talks on Iran’s nuclear program. The US remains cautious about the proposal and is expected to respond with counteroffers in the coming days, with Tehran’s nuclear ambitions continuing to be a major sticking point. Investors are also looking ahead to policy decisions from key central banks this week, including the Fed, ECB, and BOJ. Elevated energy prices driven by the Middle East conflict have fueled inflation fears and increased expectations that central banks may keep interest rates higher for longer or even tighten further, weighing on non-yielding bullion.

Gold prices remained largely unchanged at $4,700 an ounce on Monday, with investors adopting a wait-and-see approach as stalled US-Iran peace talks and a busy week of economic data and central bank meetings loom. The precious metal ended last week down 2.5%, breaking a four-week streak of gains. Reports indicate Iran presented the US with a new proposal to reopen the Strait of Hormuz, following US President Donald Trump’s cancellation of a planned trip by senior envoys to Islamabad for talks with Iran over the weekend. The prolonged stalemate has pushed oil prices higher, amplifying inflation concerns and reinforcing expectations that central banks may maintain or even raise interest rates to counter inflationary pressures. This week, major central banks, including the Federal Reserve, are expected to keep rates unchanged. However, markets will closely watch for any signals that officials are growing increasingly concerned about the inflation risks stemming from the US-Iran conflict.