Gold prices declined during Asian trading on Monday after solid gains last week, as the metal came under pressure from two main factors: rising oil prices and a stronger US dollar. The decline followed US President Donald Trump’s rejection of Iran’s response to the American peace proposal, which brought caution back to markets and reduced investor appetite for gold.
Spot gold fell by around 1% to $4,669.82 per ounce, while US gold futures dropped 1.1% to $4,678.31. The yellow metal had gained more than 2% last week, supported by market optimism over the possibility of an agreement between Washington and Tehran, before those expectations faded with the return of political escalation.
Trump’s rejection of the Iranian response, which he described as “totally unacceptable,” brought geopolitical risks back into focus, especially with ongoing tension surrounding the nuclear file and the Strait of Hormuz. According to reports, Tehran rejected US demands to dismantle its nuclear facilities or suspend uranium enrichment for 20 years. Instead, it proposed a plan to end the war and gradually reopen the Strait of Hormuz to commercial vessels in exchange for lifting the US blockade on Iranian ships.
Brent crude futures rose 4.2% to $105.55 per barrel, while US West Texas Intermediate crude climbed 4.8% to $100 per barrel. This rebound came after losses of more than 6% last week, when markets had priced in the possibility that Washington and Tehran were nearing a temporary agreement that could ease tensions and support the stability of Gulf shipping routes.
According to reports, the original US proposal included halting Iran’s uranium enrichment activities for 20 years, removing highly enriched uranium stockpiles, and dismantling key nuclear facilities in exchange for sanctions relief and an end to military operations.
Iran’s response, delivered through Pakistani mediators, called for lifting sanctions, ending the US naval presence around the Strait of Hormuz, providing security guarantees, and recognizing Tehran’s right to continue some nuclear activities. Reports also indicated that Iran proposed diluting part of its highly enriched uranium and transferring the remaining amount to a third country.
Meanwhile, oil prices jumped nearly 5% as the Strait of Hormuz remained closed, increasing market concerns that inflation could stay elevated for longer. Higher energy prices directly affect transportation and production costs, which could push central banks, led by the US Federal Reserve, to delay interest rate cuts.
Dollar strength added further pressure on gold, after strong US jobs data supported expectations that the Federal Reserve may maintain its tight policy stance for a longer period. The US Dollar Index rose 0.2% during Asian trading, making gold more expensive for holders of other currencies and weakening demand for the non yielding metal.
Markets are now watching upcoming US inflation data, along with Trump’s visit to China and his expected meeting with Chinese President Xi Jinping. Discussions are expected to include Iran, trade, and global energy security. These issues could directly affect dollar movements, commodity prices, and global risk appetite.
In other metals markets, silver rose slightly to $80.51 per ounce, while platinum fell to $2,030.04. Copper also recorded a limited rise on the London Metal Exchange and in US futures, as markets continued to monitor global demand trends and trade tensions.
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