Gold edged lower early Monday amid ongoing concerns about inflation and the Iran war after the U.S. said it would escort oil tankers through the Strait of Hormuz.
U.S. President Donald Trump on Sunday announced an initiative he called Project Freedom to help guide stranded ships out of the strait, a key artery through which oil equivalent to about a fifth of global daily consumption passed. He said it would begin Monday morning in the Middle East but offered few details. Iran said it’s a violation of the ceasefire.
Separately, Iran said the U.S. has responded to its latest peace proposal. Trump said his representatives were having “very positive discussions” with Iran.
June gold futures fell 2% last week to $4,644.50 an ounce on Comex, though the most-active contract rose 0.3% Friday. Bullion dropped 1% last month after sliding 11% in March and climbing 11% in February. It rallied 64% last year.
The prospect of a prolonged conflict with Iran that would contribute to high inflation and keep interest rates elevated, continues to weigh on markets.
The Fed last week held interest rates steady at 3.5% to 3.75%, as expected, but policymakers were unusually divided. About 95% of the investors tracked by the CME FedWatch Tool are betting on rates staying unchanged again in June. The Iran war has erased expectations that the Fed would cut interest rates this year. Most investors tracked by the tool now expect the central bank to keep U.S. interest rates unchanged until the latter half of next year.
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.
Higher interest rates are typically bearish for gold, making the yellow metal a less attractive alternate investment than other assets.
Investors are awaiting the release of the key U.S. monthly jobs report Friday for further guidance on the economy. The private payrolls report from ADP comes out Wednesday, followed by weekly initial jobless claims data on Thursday.
Late last week, the Federal Reserve’s favorite inflation measure, the personal consumption expenditures price index for March, came in in line with estimates. March Core PCE, which excludes volatile food and energy prices, was 3.2% for the year, the highest level since November 2023, in data out Thursday. Including food and energy prices, the annual rate reached 3.5%. The March report was the first to include a full month of data since the war began. The Fed has a 2% annual inflation target.
Front-month silver futures dropped 0.7% last week to settle at $76.43 an ounce on Comex, and the July contract increased 3.3% Friday. The most-active contract touched a record above $115 in January. Silver lost 1.2% in April after dropping 20% in March and gaining 19% in February. It rose 141% last year.
Spot palladium increased 2.7% last week to $1,551.00 an ounce, after adding 0.5% Friday. Palladium rose 3.2% last month after tumbling 17% in March and gaining 8.8% in February. Palladium rose 74% last year.
Spot platinum fell 0.9% last week to $2,010.80 an ounce but rose 0.9% Friday. It gained 1.3% in April after declining 17% in March and advancing 15% in February. Platinum increased 122% in 2025.
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