Gold prices continued to face headwinds on Monday, slipping 0.6% to $4,684.32 an ounce in London trading, as a stronger U.S. dollar and renewed fears of sticky inflation outweighed any safe-haven demand triggered by escalating U.S.-Iran tensions. U.S. June gold futures fell 0.8% to $4,692.70 on Comex, keeping the metal firmly below the psychologically important $4,700 level.
The decline came despite a further deterioration in the U.S.-Iran standoff after President Donald Trump rejected Iran’s response to a U.S. peace proposal, prolonging a 10-week impasse that has already roiled energy markets and threatened supply through the Strait of Hormuz. Typically, such geopolitical flare-ups would drive investors toward gold. However, the metal is being undermined by a resurgent dollar, which makes bullion more expensive for buyers outside the United States and often limits international demand.
Adding to the pressure, oil prices climbed on supply disruption worries, feeding expectations that inflation could remain stubbornly high. A sustained rise in crude can force central banks to keep monetary policy restrictive for longer, a scenario that weighs on non-yielding assets like gold. “Gold’s inability to rally despite the headlines signals a market that is more focused on interest rate expectations than geopolitical flashpoints,” noted analysts.
Market participants are closely watching the upcoming U.S. consumer price index report for a clearer inflation picture. A firmer-than-expected reading would reinforce the case for the Federal Reserve to hold rates high, potentially pushing gold further into consolidation. Conversely, a softer print could ease dollar strength and offer some relief. Meanwhile, supply-side pressures are also emerging: China’s gold output fell to 28 tonnes in the first quarter of 2026 from 43 tonnes a year earlier, due to shutdowns linked to safety inspections, according to the China Gold Association.
For now, gold is caught between opposing forces. While haven buying may prevent a sharper sell-off, a break below key support at $4,600 could open the door to further losses, while a sustained move above $4,700 would be needed to signal a bullish reversal. The broader implications for the crypto market are similarly mixed, as Bitcoin and other digital assets often move in tandem with gold during periods of dollar strength and elevated rate expectations. Investors in both traditional and digital stores of value will be watching for any shift in Fed policy language or a significant escalation in the Middle East to provide a clearer directional catalyst.
