Gold declines to near $4,600 amid escalating Middle East tensions

• Gold price posts modest losses near $4,605 in Monday’s early Asian session. 
• Trump casts doubts on Iran peace proposal as details emerge. 
• Major central banks’ demand might help limit the losses of gold. 

Gold price (XAU/USD) trades with mild losses around $4,605 during the early Asian trading hours on Monday. Traders will closely monitor the developments surrounding the ongoing geopolitical tensions. Federal Reserve (Fed) Bank of New York President John Williams is set to speak later on Monday. 

Bloomberg reported on Sunday that efforts to mediate an end to the Iran war persisted after US President Donald Trump hinted that Tehran’s latest peace proposal might not be enough to satisfy him. Trump also said that the US will begin guiding some neutral ships trapped in the Persian Gulf out through the Strait of Hormuz beginning Monday. 

Meanwhile, an Iranian official warned that US interference in Hormuz will be considered a violation of the ceasefire, adding that the Strait of Hormuz and the Persian Gulf are not a place for rhetoric. 

Any signs of escalating tensions in the Middle East could have fueled inflation fears, making rate cuts less likely. This, in turn, could weigh on the yellow metal. Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.

On the other hand, major central bank demands might cap the downside for the yellow metal. The Reserve Bank of India (RBI) has focused on “repatriation,” bringing over 100 metric tons of its gold back to Indian soil for the third consecutive year. It currently holds approximately 880 metric tons of gold as of end-March 2026.