Gold Pares Rebound

Gold prices fell to the $4,550 per ounce mark on Monday, testing their lowest since late March as pro-inflationary forces backed the likelihood of a hawkish response by the Federal Reserve. The US and Iran maintained their stalemate over the weekend, prolonging the blockade of commercial vessels crossing the Strait of Hormuz to extend the global shortage of oil and refined fuel. Energy prices rose further to test their post-war peaks, adding to pre-inflationary risks and strengthening the argument for hawkish members in the Fed and other major central banks. Higher energy prices had already triggered a surge in producer prices in April, while consumer inflation rose to a three-year high. Restrictive interest rates lift bond yields and drive investors to favor fixed-income assets instead of coupon-less precious metals, pressuring bullion prices.

Gold erased earlier losses to trade above $4,560 an ounce on Monday, trying to recover from a near 4% weekly drop as investors focused on potential progress in resolving the Iran conflict. Despite US President Donald Trump’s calls for Iran to act quickly, unconfirmed reports suggested a possible breakthrough, with the US reportedly lifting sanctions on Iranian oil and Tehran agreeing to a long-term freeze of its nuclear program. The precious metal had faced pressure from a stronger US dollar and rising Treasury yields after hotter-than-expected US inflation data led investors to rule out Federal Reserve rate cuts this year, while fueling speculation of a possible rate hike before year-end.

Gold traded below $4,550 an ounce on Monday after tumbling nearly 4% last week, as mounting evidence that the Middle East-driven energy price shock is feeding into broader inflation pressures strengthened expectations for central bank policy tightening. The precious metal was also weighed down by strong gains in the US dollar and Treasury yields after hotter-than-expected US inflation data led investors to rule out any Federal Reserve rate cuts this year, while increasing speculation that policymakers could still raise rates before year-end. Meanwhile, President Donald Trump warned that Tehran is running out of time to secure an agreement with Washington, while Iranian media reports indicated negotiations remain deadlocked, with the US offering “no tangible concessions.” Over the weekend, energy infrastructure in the Persian Gulf was also targeted, including a nuclear facility in the United Arab Emirates, adding to geopolitical tensions in the region.