Gold prices fell amid growing inflation fears sparked by Trump’s threats to close the Strait of Hormuz and the failure of negotiations with Iran

Gold prices had a volatile start to the week, with trading on Monday opening significantly lower following the breakdown of negotiations between the United States and Iran over the weekend, which brought uncertainty back to global markets.

A Fundamental Look at Gold’s Movements

Gold prices fell at the open to levels near $4,644 per ounce, before staging a strong upward rebound that pushed them to the $4,730 mark, bringing them close to last week’s closing levels and successfully closing the downward price gap.

Although Washington and Tehran continue to exchange messages through unofficial diplomatic channels, the outlook remains unclear regarding when formal negotiations will resume.

On the other hand, developments indicate that the ceasefire remains intact, though political pressures have escalated following U.S. President Donald Trump’s move toward imposing a blockade on Iranian ports.

Oil and Inflation Reshape Market Expectations

The decline in gold prices came amid mounting fears of a prolonged shock to energy supplies, particularly following threats to close the Strait of Hormuz, which pushed oil prices back above $100 per barrel.

The previous decline in oil prices had reinforced market expectations that the Federal Reserve might cut interest rates this year.

However, the recent sharp rise in energy prices has reignited inflation fears, reducing the likelihood of a rate cut in the near term.

Gold typically benefits from geopolitical tensions as a safe-haven asset, but the continued rise in oil prices and the resulting potential increase in inflationary pressures could affect interest rate cuts.

This could exert downward pressure on gold, given that it is a non-yielding asset.

Technical Analysis of Gold

Technically, gold managed to rebound after touching the $4,644 level, which coincided with a retest of the broken downtrend on the four-hour timeframe.

The precious metal is currently attempting to consolidate and regain upward momentum, provided it remains above the key support level at $4,590 per ounce.

This level is key to maintaining a positive outlook in the short term. If gold remains stable above these support levels, we may see new attempts to rise; however, a break below these levels could pave the way for a new corrective downtrend.

As mentioned in our weekly analysis video here