Gold Gains Cautiously as US-Iran Talks Stall Ahead of Inflation Data
The rise in gold prices remains cautious ahead of the publication of US inflation data. Market participants continue to monitor the risks of escalating conflict in the West Asia region.
Spot gold rose around 0.37% to $4731.02 on Monday (May 11). Investors were closely monitoring developments surrounding negotiations between the United States and Iran, alongside the upcoming release of US inflation figures later this week.
Recent reports indicated that Donald Trump had rejected Iran's response to a peace proposal put forward by Washington, despite claims that Tehran had not requested special concessions from the United States. Iranian Foreign Ministry spokesperson Esmaeil Baqei stated that Iran's demands were limited to ending the trade war and halting what Tehran described as acts of piracy against their vessels.
The deadlock in Middle East diplomacy has revived market concerns over the possibility of a prolonged disruption in the Strait of Hormuz. Although geopolitical uncertainty remained elevated, gold prices continued to receive support from bargain-hunting activity ahead of Wednesday's US inflation report.
Jim Wyckoff, a market analyst at American Gold Exchange, confirmed investor positioning and bargain buying appeared to be supporting gold prices ahead of the inflation release this week.
Despite the recent uptick, gold has continued to underperform compared with last year. Since the outbreak of conflict in late February, bullion prices have declined by about 11% as surging oil prices increased pressure on the precious metal. Higher crude oil prices are widely viewed as negative for gold because they may fuel inflation and maintain high interest rates.
Han Tan, chief market analyst at Bybit, said inflation risks remained the dominant concern for broader financial markets, particularly as peace efforts had yet to show meaningful progress following the mutual rejection of proposals by Washington and Tehran.
US April inflation data, scheduled for release this week, is not expected to provide a significant support for gold prices. According to Bloomberg estimates, headline inflation is forecast to reach 3.8%, while core inflation, which excludes food and energy prices, is expected to rise to 2.8%.