Gold prices edged lower in thin trading on Monday as investors remained cautious amid lingering inflation concerns, an uncertain U.S. monetary policy outlook, and unresolved developments in U.S.-Iran peace negotiations.

With major markets in China, Japan, and the United Kingdom closed for holidays, trading activity was relatively subdued, leaving gold without a strong directional catalyst.

Spot gold fell 0.5% to $4,588.71 per ounce as of 0655 GMT, while U.S. gold futures for June delivery declined 0.9% to $4,600.60 per ounce. Although the decline was modest, it reflected a more cautious market tone as investors weighed safe-haven demand against renewed pressure from U.S. interest rate expectations.

Oil Above $100 Remains a Critical Market Variable

Although oil prices eased slightly, they remained above $100 per barrel, keeping inflation risks firmly in focus. The lack of clarity surrounding a potential U.S.-Iran peace agreement continues to weigh on market sentiment.

Higher oil prices can feed into broader inflation by increasing transportation, production, and consumer costs. If energy-driven inflation remains elevated, central banks may be forced to keep interest rates higher for longer. That would continue to pressure gold, despite its traditional role as an inflation hedge and safe-haven asset.

At the same time, tensions in the Middle East are still providing some support for gold. President Donald Trump said the United States would begin helping to free ships stranded in the Gulf from Monday, while a tanker reportedly came under attack from unknown projectiles in the Strait of Hormuz.

Iranian state media also reported that Washington had delivered its response to Iran’s 14-point proposal through Pakistan, and that Tehran was now reviewing it.

Gold Is Being Pulled Between Two Opposing Forces

At the moment, gold is caught between two powerful forces.

On one side, geopolitical tensions, energy risks, and uncertainty in the Middle East continue to support safe-haven demand. On the other side, persistent inflation, a cautious Federal Reserve, and the possibility of higher-for-longer interest rates are limiting gold’s upside potential.

According to Tim Waterer, chief market analyst at KCM Trade, gold is still feeling the lingering effects of last week’s hawkish Fed messaging, particularly from dissenting voices pushing back against further policy easing.

Waterer expects gold to trade largely within a $4,400 to $5,500 per ounce range by year-end. For gold to move toward the upper end of that range, the market would need to see a durable reduction in Middle East tensions and some easing of inflation pressures. However, if oil prices remain persistently high, gold could stay in the lower half of that range.

Other Precious Metals Also Weaken

The broader precious metals market also showed signs of softness.

Spot silver fell 0.6% to $74.91 per ounce, while palladium declined 0.4% to $1,519.78. Platinum was little changed at around $1,989.

This suggests that the pressure is not isolated to gold alone. Instead, it reflects a broader sense of caution across the precious metals market as investors reassess inflation risks, interest rate expectations, and geopolitical developments.

Source: Reuters

Disclaimer: This article is for market informations only and does not constitute financial advice or an investment recommendation.