Gold begins the new week on a negative note, as the collapse of peace talks between the United States and Iran strengthens the US dollar. However, the possibility of a diplomatic solution remains open, limiting the dollar's gains and providing some support for the precious metal. Conversely, high oil prices are fueling inflationary concerns and expectations of tighter monetary policy, which could limit gold's gains.
Gold is struggling to capitalize on its rebound from the $4632-$4633 area, its lowest level in four days, and continues its downward trend as the European session begins. Reports indicate that regional powers are working to bring the US and Iran back to the negotiating table within days, following the recent talks ending without an agreement. This is limiting the dollar's ability to make further gains and providing some support for gold. However, the lack of buying momentum and persistent negative fundamental pressures warrant caution before anticipating any significant rally in the precious metal.
Meanwhile, US crude oil (WTI) prices rose again to $105 a barrel, driven by geopolitical developments. This coincided with data showing that US inflation in March surged at its fastest pace in nearly four years, with the Consumer Price Index (CPI) rising 0.9% month-on-month and 3.3% year-on-year. This prompted investors to reduce their bets on interest rate cuts this year and shift towards expectations of rate hikes, leading to higher US Treasury yields and a stronger dollar.
In light of these data, gold prices remain under pressure, amid growing expectations of tighter monetary policy, which calls for caution before taking strong buying positions in the near term.