Gold prices (XAU/USD) declined to near $4,535 during the early Asian session on Monday, breaking a two-day winning streak [1]. The drop was attributed to the lack of progress in US-Iran peace negotiations, with Iranian officials confirming that talks with the US are ongoing but no nuclear commitments have been made [1]. Iran's parliament speaker and top negotiator, Mohammad Bagher Ghalibaf, emphasized that Tehran will not accept any deal with Washington unless it ensures 'the rights of the Iranian people are secured' [1].
Meanwhile, geopolitical tensions escalated as Israel expanded its ground attack in Lebanon, disrupting a fragile truce with its northern neighbor [1]. Despite gold's traditional role as a safe-haven asset during periods of uncertainty, its appeal has been dampened by hawkish signals from Federal Reserve policymakers. On Friday, Fed officials indicated that interest rates may need to rise in the future if the Middle East conflict leads to sustained inflationary pressures [1]. Since gold does not yield interest, it becomes less attractive in a high-rate environment [1].
Market participants are now awaiting the US May employment data, scheduled for release on Friday, which could provide further insight into the strength of the US economy and influence expectations regarding potential Fed rate hikes next year [1].
CONCLUSION
Gold prices have retreated as ongoing US-Iran negotiations and heightened Middle East tensions are overshadowed by the Federal Reserve's hawkish outlook. The market is now focused on upcoming US employment data, which may shape future interest rate expectations and gold's attractiveness as a safe-haven asset.