Gold dropped early Monday as the dollar and oil prices climbed following the collapse of U.S.-Iranian negotiations over the weekend and President Donald Trump’s threat to blockade the Strait of Hormuz, a critical oil-market artery.
The stronger dollar makes gold more expensive for holders of other currencies. The conflict in Iran has also boosted the price of energy and other goods, raising inflation concerns and reducing hopes that the Federal Reserve will cut interest rates this year. Higher interest rates are typically bearish for gold, making it a less attractive investment than some other assets.
June gold futures rose 2.3% last week to $4,787.40 an ounce on Comex, though the most-active contract fell 0.6% Friday. Bullion slid 11% in March after climbing 11% in February and rising 9.3% in January. It rallied 64% last year. The June contract is currently down $36.40 (-0.76%) an ounce to $4751.00 and the DG spot price is $4734.60.
The collapse in peace talks was met with belligerent statements on either side. The U.S. Navy prepared to blockade the Strait, potentially shutting in Iranian oil shipments, while Iran’s Revolutionary Guards warned that military vessels approaching the strait will be dealt with harshly.
Gold prices, which have declined from record highs since the start of the war, ticked higher last week amid initial optimism that a ceasefire would hold.
The Iran conflict has erased expectations that the Fed would cut interest rates this year. The consumer price index, a key inflation measure, on Friday showed that the cost of goods surged last month on the conflict. Annual inflation climbed to 3.3% in March, the highest level in almost two years. The figure compared with annual inflation of 2.4% in February and the Fed’s target of 2%. Core CPI, which excludes volatile food and energy prices, was 2.6% from a month earlier, lower than economists had expected.
Most investors tracked by the CME FedWatch Tool now expect the Federal Reserve to keep U.S. interest rates unchanged until the latter half of next year. Almost all the investors tracked by the tool are betting on rates staying unchanged at the next policy meeting in April.
Fed policymakers last month kept interest rates unchanged again at 3.50% to 3.75%. The Fed has kept interest rates unchanged this year after three previous rate cuts. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts in 2024.
In economic reports this week, the producer price index comes out Tuesday with March numbers, followed by the import price index and home builder confidence index Wednesday and industrial production and weekly initial jobless claims on Thursday.
Front-month silver futures gained 4.9% last week to settle at $76.48 an ounce on Comex, after the May contract increased 4.2 cents Friday. The most-active contract touched a record above $115 in January. Silver dropped 20% last month after gaining 19% in February and advancing 11% in January. It rose 141% last year. The May contract is currently down $2.460 (-3.22%) an ounce to $74.020 and the DG spot price is $74.05.
Spot palladium rose 1.6% last week to $1,538.50 an ounce, but slipped 2.4% Friday. Palladium tumbled 17% in March after gaining 8.8% in February and advancing 2.4% in January. Palladium rose 74% last year. Currently, the DG spot price is up $3.80 an ounce to $1544.00.
Spot platinum increased 3.5% last week to $2,065.30 an ounce, though it lost 2.6% Friday. It declined 17% in March after advancing 15% in February and gaining 1.4% in January. Platinum increased 122% in 2025. The DG spot price is currently down $29.20 an ounce to $2037.00.
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