Gold loses more than 1% as renewed military tensions flare between the US and Iran

Gold prices fell by more than 1% in European trading on Monday, retreating from a two-week high and heading toward their first loss in three sessions, amid profit-taking and corrective selling pressure. The precious metal also came under pressure from a stronger US dollar and rising oil prices as a new wave of military strikes was exchanged between the United States and Iran.

The latest round of attacks comes as Washington and Tehran continue negotiations aimed at ending the three-month conflict, with US President Donald Trump seeking stricter conditions related to Iran’s nuclear program.

Higher oil prices have revived inflation concerns, increasing pressure on Federal Reserve policymakers and boosting expectations for a US interest rate hike later this year, pending additional economic data and comments from Fed officials.

Price Overview

• Gold prices today: Spot gold fell 1.1% to $4,490.64 per ounce, down from the opening level of $4,540.17, after reaching an intraday high of $4,546.05.

• At Friday’s settlement, gold gained 0.95%, marking its second consecutive daily advance and reaching a two-week high of $4,595.33 per ounce, supported by progress in peace negotiations between the United States and Iran.

• Gold lost approximately 1.8% during May, recording its third consecutive monthly decline due to weaker investment demand amid rising global government bond yields.

US dollar

The dollar index rose 0.15% on Monday as part of a recovery from a two-week low, reflecting renewed strength in the US currency against a basket of global currencies.

The advance comes amid heightened caution and reduced risk appetite after the United States and Iran exchanged a new round of military strikes while continuing intensive negotiations aimed at ending the war and reopening the Strait of Hormuz, one of the world’s most important energy trade routes.

Global oil prices

Oil prices jumped more than 3% on Monday, recovering from five-week lows as military tensions escalated in the Strait of Hormuz, while Israel expanded its offensive in Lebanon, reducing hopes for a ceasefire across the Middle East.

Latest developments in the Iranian war

• The United States announced strikes on Iranian military sites, and Tehran responded with an attack on an air base.

• The US military said it destroyed Iranian air defense systems, a ground control station, and two drones.

• Iran’s Revolutionary Guard announced that it had retaliated by launching an attack on a US air base.

• Reports indicated that Kuwaiti air defenses intercepted missiles and drone attacks.

• The United States and Iran remain without an agreement to end the war after Trump stated that he is not in a hurry to finalize a deal.

• The US president returned the proposed agreement draft with Iran to include “stricter” conditions related to the nuclear file, extending negotiations for several additional days.

• Donald Trump said on Friday that he would make a decision soon regarding the proposed agreement to extend the ceasefire with Iran.

• The mechanism for releasing frozen Iranian assets abroad remains one of the most complex points of disagreement between Washington and Tehran.

• Iranian Foreign Minister Abbas Araghchi confirmed that messages continue to be exchanged with Washington, noting that the success of the talks will ultimately be judged by their final outcome and whether the rights of the Iranian people are preserved.

US interest rates

• Federal Reserve Vice Chair for Supervision Michelle Bowman said on Friday that the consequences of the Middle East conflict could generate more persistent inflationary pressures, potentially requiring a reassessment of the future path of US monetary policy.

• According to the CME FedWatch Tool, market pricing for a Federal Reserve rate hike in December increased from 47% to 53%.

• Markets continue to price a 99% probability that interest rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate hike stands at 1%.

• To reassess those expectations, investors are closely monitoring upcoming US economic data releases and comments from Federal Reserve officials.

Gold outlook

Ricardo Evangelista, analyst at ActivTrades, said: “The optimism surrounding US-Iran negotiations to end the confrontation in the Strait of Hormuz faded over the weekend. As a result, oil prices rebounded, reviving inflation concerns and reinforcing the Federal Reserve’s hawkish outlook.”

Evangelista added: “Traders will be closely watching this week’s key economic data releases, as they could reshape expectations regarding the future path of Federal Reserve policy, influencing demand for the US dollar and, consequently, gold prices.”

SPDR Gold Trust

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined by 3.42 metric tons on Friday, marking a second consecutive daily decrease. Total holdings fell to 1,029.14 metric tons, the lowest level since October 15, 2025.