Gold prices saw a minor drop on Monday, driven by worries about inflation that have created ambiguity around the direction of U.S. monetary policy, as market players awaited news on U.S.-Iran peace talks. Spot gold saw a decrease of 0.3%, trading at $4,599.45 per ounce, as of 0114. Gold futures in the U.S. for June delivery fell by 0.7%, closing at $4,611.40. U.S. President Donald Trump declared that Washington would begin an initiative on Monday morning to free vessels stranded in the Strait of Hormuz, describing this action as a “humanitarian gesture” intended to support neutral nations during the U.S.-Israeli conflict with Iran.

It is reported that Washington conveyed its response to Iran’s 14-point proposal via Pakistan, and that Tehran is now reviewing it. Oil prices have eased but are still over $100 a barrel, with uncertainty regarding a possible U.S.-Iran peace agreement remaining a key concern. Increasing oil prices could lead central banks to keep interest rates high for a longer time, putting pressure on non-yielding assets like gold, as investors look for better returns in alternatives such as Treasury yields.

Last week, the U.S. Federal Reserve kept its interest rates steady and expressed a firm position, causing markets to give up any hopes for a rate cut this year. Federal Reserve Bank of Minneapolis President Neel Kashkari noted that the ongoing nature of the Iran war heightens the risks tied to high inflation and economic harm, which limits the central bank’s ability to provide clear guidance on rate policy at this time. Last week’s inflation data was described as “bad news” for the U.S. Federal Reserve, suggesting that the central bank needs to be careful about rate cuts until there is a clear decrease in inflation, as stated.

Data indicated that U.S. inflation experienced an increase in March, influenced by the conflict in Iran which resulted in higher gasoline prices. The Personal Consumption Expenditures Price Index jumped by 0.7%, representing the largest increase since June 2022. Gold speculators raised their net long positions by 3,924 contracts, resulting in a total of 91,574 for the week ending April 28. Spot silver increased by 0.1% to $75.38 per ounce, platinum rose by 0.2% to $1,991.85, while palladium experienced a decline of 0.3% to $1,519.66.