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The price of gold fell this Monday after President Donald Trump rejected Iran's response to a peace proposal, raising concerns about inflation and interest rate prospects in a market already strained by the conflict in the Middle East.
According to data published by Reuters, spot gold fell by 0.5%, settling at $4,692.49 per ounce, while June futures declined by 0.9%, to $4,686.20.
The trigger was Trump's rejection of the Iranian counterproposal released on Sunday. Iran had suggested ending the war on all fronts—especially in Lebanon—and demanded compensation for war damages. Hours later, Trump dismissed the offer.
The conflict between the United States and Iran has been ongoing for approximately ten weeks, since the U.S. and Israel launched Operation Epic Fury against Iranian nuclear facilities in late February.
The Iranian response included the closure of the Strait of Hormuz, which jumped the price of Brent crude from $70 to over $126 per barrel and increased the year-on-year inflation in the U.S. to 3.5% in March 2026, its highest level in almost three years.
«Concerns about inflation have risen after the United States rejected Iran's response, while restrictions in the Strait of Hormuz are increasing these pressures and harming gold, as high inflation could keep interest rates elevated,» explained Jim Wyckoff, market analyst at American Gold Exchange.
The gold is considered a safe haven against inflation, but high interest rates penalize the precious metal by increasing the opportunity cost of holding non-yielding assets.
The Federal Reserve keeps its benchmark rate at 3.5%-3.75%, and global brokerage firms have lowered their expectations for cuts in 2026, with forecasts divided between some easing and no adjustment at all.
Tim Waterer, chief market analyst at KCM Trade, summarized the situation: "We are seeing a fading of hopes for an imminent peace agreement, and gold is feeling the pinch of the renewed rise in crude oil prices."
This week, the Consumer Price Index data for April will be released in the U.S., following a jobs report that showed stronger-than-expected job creation.
Markets are also closely monitoring Trump's visit to China, scheduled for the coming days, where he will meet with President Xi Jinping to discuss Iran, Taiwan, artificial intelligence, and nuclear weapons.
An additional factor that pressured the market was Indian Prime Minister Narendra Modi's call for the population to refrain from purchasing gold for a year to protect the country's foreign currency reserves.
India imported almost 72 billion dollars worth of gold in the fiscal year 2025-26, making the country the second largest consumer of the metal in the world.
The announcement caused shares of major Indian jewelers to plummet: Sky Gold fell by 12%, Kalyan Jewellers by 8.81%, and Titan by 6.19%.
Gold touched an intraday low of $4,648.30 per ounce, far from the historical record of $5,111.07 reached on January 27, 2026, when the conflict with Iran triggered an unprecedented surge in the price of the metal.
Among other metals, silver rose by up to 3.1%, trading around $82.84 per ounce.
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