Gold prices dropped in Asian trading Monday as the prospect of a lasting ceasefire between the United States and Iran appeared to crumble, driving oil prices sharply higher and reigniting fears of energy-fueled inflation that have weighed on bullion markets since the conflict began in late February.
Spot gold slipped roughly 0.6% to approximately $4,803 per ounce, while gold futures for June delivery declined about 1% to hover near $4,829. The precious metal hit its lowest level since April 13 earlier in the session before staging a partial recovery. The U.S. dollar strengthened alongside rising Treasury yields, making dollar-denominated gold more expensive for international buyers and adding further downward pressure on prices.
The immediate catalyst was a sharp deterioration in diplomatic relations over the weekend. The United States seized an Iranian cargo vessel attempting to bypass its naval blockade, and President Donald Trump confirmed the action Sunday evening. Both governments accused the other of violating the ceasefire agreement, while Tehran announced it would not participate in a second round of negotiations the U.S. had hoped to begin before the truce expires Tuesday. Trump said American envoys were traveling to Pakistan to pursue further talks, but Iranian state media indicated no commitment had been made.
Crude oil surged as much as 7% on the news, with Iran's renewed closure of the Strait of Hormuz keeping shipping through the Gulf at a near standstill.
