Gold Prices Drop Due to Inflation Concerns and Failed US-Iran Negotiations

Global gold prices weakened at the start of this week amid rising concerns over global inflation following the failure of peace talks between the United States (US) and Iran.
This condition pushed the US dollar higher and caused a surge in oil prices, ultimately pressuring the prospects of interest rate cuts by the US central bank this year.
On Monday (13/4/2026) trading, spot gold prices fell 0.7% to US$ 4,716.70 per ounce, reaching the lowest level since April 7.
Meanwhile, US gold futures for June delivery also dropped 1% to US$ 4,738.90 per ounce. At the same time, the US dollar appreciated by 0.4%, making dollar-priced gold more expensive for global investors.
Pressure on gold intensified after oil prices surged again above US$100 per barrel. This increase was triggered by escalating tensions in the Middle East following the failure of negotiations between the US and Iran to end the conflict.
It was even reported that the US is preparing a blockade in the Strait of Hormuz to limit Iranian oil exports.
In response, Iran’s Revolutionary Guard warned that any military vessel approaching the area would be considered a violation of the ceasefire and will be dealt with firmly.
KCM Trade analyst, Tim Waterer, said this situation caused market sentiment to change rapidly. “The optimism of a ceasefire is fading, and the surge in the dollar and oil prices is again putting pressure on gold,” he said.
Since the conflict between the US and Israel against Iran erupted on February 28, gold prices have already fallen more than 11%. Historically, gold usually acts as a safe haven asset during geopolitical turmoil and inflation.
However, high interest rates have reduced gold’s appeal because it does not provide yields. The rise in energy prices, which fuels inflation, also causes central banks to hold back or even raise interest rates.
According to Waterer, every time oil prices break above US$ 100 per barrel, the market immediately speculates about the potential for interest rate hikes to curb inflation.
“Expectations of interest rate hikes are what weaken gold’s performance,” he said.
Currently, market participants see the chances of the US central bank cutting interest rates this year as increasingly slim.
Previously, before the Middle East conflict escalated, the market had expected two rate cuts throughout the year.
Read Also: Gold Prices Drop, Inflation Concerns Pressure Fed Rate Cut Prospects
In other metal markets, silver prices fell 2% to US$ 74.35 per ounce, platinum weakened 0.2% to US$ 2,041.40, while palladium rose 0.7% to US$ 1,530.80 per ounce.
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