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As US-Iran talks fail, gold falls due to inflation fears caused by oil.

Gold prices fell Monday as a lack progress in the 'U.S. - Iran peace negotiations' pushed up?oil?prices, fueling concerns that inflation could continue to keep interest rates high.

As of 0223 GMT, spot gold was down 0.6%, at $4,684.32 an ounce. U.S. Gold Futures for June Delivery fell 0.8% to $4,692.70.

Dollar strengthened, causing greenback-priced gold to be more expensive for holders other currencies. U.S. president Donald Trump rejected Iran's response on Sunday to a U.S. peace proposal, destroying hopes of an imminent end to this 10-week conflict which has caused extensive damage in Iran and Lebanon and paralyzed the maritime traffic?in the Strait of Hormuz and driven up the global energy prices.

Tim Waterer is the chief market analyst for KCM Trade. He said: "We are essentially witnessing a dissipation of hope in an imminent?peace?deal. Gold is feeling the pinch due to the renewed rise in?crude?prices."

Oil prices rose as the Strait of Hormuz was largely closed and global energy supplies were tight.

Increasing crude oil prices could lead to higher inflation, which would increase the likelihood of high interest rates. Gold is often seen as a hedge to inflation. However, rising interest rates can weigh down on this 'non-yielding' asset. According to a report by the Federal Reserve released on Friday, the ongoing war with Iran has pushed oil prices and supplies to the top of financial stability concerns.

Investors will be watching the U.S. Consumer Price Index for April, which is due this week, to get a better idea of how the Fed intends to orient its monetary policy. China's gold output fell by a quarter in the first three months of 2026 compared to a year ago, according to the China Gold Association. Safety inspections forced some smelters to suspend production.

"In the ?near-to-medium term, the $4,400 to $4,800 range still looks ?firmly in play while we remain in this ceasefire-without-a-peace-deal stalemate," Waterer added.

Silver spot rose by 0.7% to $80.88 an ounce. Platinum fell 0.6% to 2,042.71, while palladium dropped 0.4% to $1,484.99. (Reporting and editing by Rashmi aich in Bengaluru)

(source: Reuters)