During the Asian trading session on Monday, gold prices fell significantly as efforts to resume peace talks between the United States and Iran reached a stalemate, while energy flows through the Strait of Hormuz remained obstructed. The conflict, now in its second month, has disrupted global markets and heightened inflationary risks.
Gold dropped as much as 0.8%, to around $4,672 per ounce, extending last week’s 2.5% decline. U.S. President Donald Trump canceled plans to send senior envoys to Islamabad to restart peace negotiations with Iran, while Tehran stated it would not engage in talks under threat.
Spot gold hit a session low of $4,672.11 per ounce at the market open, losing more than $38 during the day.
According to Iranian sources, Iran has conveyed a three-phase negotiation proposal to the United States through intermediaries. Earlier, Iranian Foreign Minister Hossein Amirabdollahian arrived in Islamabad, Pakistan, with a key agenda item being to communicate Iran’s conditions for ending the war to Pakistan, which is acting as a mediating country.
In addition, U.S. President Donald Trump stated that the Iran conflict “will end soon” and that the United States “will emerge victorious.”
Due to blockades imposed by both sides, the Strait of Hormuz has become nearly impassable, pushing oil prices higher on Monday. The energy supply shock caused by the war has intensified inflation risks, raising the likelihood that central banks will keep interest rates steady for longer or even hike them—a negative for non-yielding assets like gold.
Since the conflict began in late February, gold prices have fallen by approximately 11%.
Nicky Shiels, head of research and metals strategy at MKS Pamp, noted that gold is in a “technical no-man’s land.” He said, “Market confidence is weak, large allocations remain on the sidelines, physical demand is mixed, and ‘lost’ may be the most honest word to describe current market conditions.”
Traders are assessing the Federal Reserve’s interest rate trajectory. On Friday, U.S. Attorney Jeanine Pirro announced that an investigation into Fed cost overruns would be dropped, clearing the way for Trump nominee Kevin Warsh to become the next Fed chair.
Investors expect Warsh to pursue a gradual, moderate rate-cutting strategy rather than the steep reductions Trump has called for.
In the Middle East, the effective closure of the Strait of Hormuz has disrupted roughly one-fifth of global oil flows. Although a fragile ceasefire largely held over the weekend, Trump directed envoys Jared Kushner and Steve Witkoff to cancel their trip to Pakistan, which is mediating the talks.
Iranian President Masoud Pezeshkian stated that Iran will not enter into negotiations “under threat or blockade.”
Shiels remarked, “The ‘ceasefire on/ceasefire off’ news cycle has influenced market behavior. Gold is now trading like a risk asset—inversely correlated with oil and broadly correlated with equities—but it’s an imperfect substitute for either, so there’s little market appetite to chase prices below $5,000 per ounce.”
Iran has put forward a new negotiation proposal, and Trump has issued a major statement.
Iranian sources said Iran has relayed a three-stage negotiation plan to the U.S. through intermediaries.
The first phase focuses on a complete end to the war and obtaining guarantees against renewed military action targeting Iran and Lebanon. If an agreement is reached in the first phase, parties would proceed to the second stage, which would address how the Strait of Hormuz should be managed. The third phase relates to nuclear discussions, but Iran will not engage on nuclear issues until the first two stages are successfully concluded.
According to Iran’s Tasnim News Agency, Foreign Minister Amirabdollahian traveled to Pakistan on Sunday for consultations. In addition to bilateral talks, he conveyed Iran’s conditions for ending the war, which include implementing a new legal regime in the Strait of Hormuz, securing compensation, ensuring no further military aggression, and lifting the maritime blockade. The negotiation terms are unrelated to nuclear matters.
On Sunday, U.S. President Trump said that if Iran wishes to negotiate an end to the war, it should take the initiative to contact the United States.
In an interview with Fox News, Trump stated, “If they want to talk, they can come to us or call us. You know, there are phones, we have good secure lines.”
On the nuclear issue, Trump said the U.S. would address Iran’s nuclear materials in negotiations as a key topic. He also expressed hope that Iran would “make a smart choice.”
Trump added, “They know what has to be in the deal. It’s very simple: they cannot have nuclear weapons, or there’s no reason to sit down and talk.”
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