Gold prices rose modestly on Monday as investors weighed stalled Iran-U.S. peace efforts, firmer oil prices and a still-restrictive U.S. interest-rate outlook. Spot gold, or XAU/USD, advanced about 0.30% and was trading near $4,726 after rebounding from session lows around $4,648.
The move reflected a market caught between competing forces. On the one hand, geopolitical uncertainty in the Middle East and renewed demand for havens supported bullion. On the other hand, a stronger U.S. dollar and expectations that the Federal Reserve will keep rates higher for longer continued to limit upside.
The latest catalyst for gold came from the breakdown in diplomatic momentum between Tehran and Washington. Iran reportedly proposed terms that included compensation for war damage, control of the Strait of Hormuz, the unfreezing of funds and an end to the U.S. Navy blockade. However, the proposal did not include the transfer of nuclear stockpiles to the United States, a key demand from President Donald Trump.
Trump dismissed the Iranian response as “totally unacceptable,” reinforcing fears that the conflict may drag on. According to Axios, Trump was also set to meet with the National Security Council to evaluate whether to resume military action, adding another layer of uncertainty for markets. That uncertainty has kept safe-haven flows alive, even if gold’s response has been less straightforward than in past geopolitical shocks.
Escalation fears pushed U.S. crude prices sharply higher, with West Texas Intermediate rising 3.60% to about $98.09 a barrel as traders priced in the risk of prolonged shipping disruption through the Strait of Hormuz. The U.S. dollar also strengthened modestly, with the Dollar Index up 0.10% at 97.94.
Ordinarily, stronger oil and a firmer dollar can pressure gold. Higher oil prices raise inflation concerns, which can support expectations for elevated interest rates, while a stronger dollar makes gold more expensive for non-U.S. buyers. Yet bullion managed to retain gains, suggesting investors are still willing to hold some protection against geopolitical and macroeconomic risk. Still, analysts note that gold has not behaved purely as a classic haven during this conflict. Instead, it has at times traded more like a broader risk asset, reacting heavily to changing expectations for inflation, rates and the dollar.
That theme was visible last week as well. On Friday, spot gold rose 0.7% to $4,719.68 an ounce and posted a weekly gain of 2.3%, while U.S. gold futures settled 0.4% higher at $4,730.70.Some analysts argued the rebound was tied not to intensifying war fears, but to hopes for eventual de-escalation. David Meger of High Ridge Futures said gold was “trading like a risk asset rather than a safe haven,” with lower energy prices improving the longer-term case for Fed rate cuts.
This dynamic has defined much of gold’s trading in 2026. Since the start of the U.S.-Iran war, bullion has been pulled in opposing directions by safe-haven buying, profit-taking, a strong dollar, and concern that elevated energy prices could force central banks to stay hawkish.
Beyond geopolitics, investors are now looking ahead to key U.S. inflation reports. The Consumer Price Index is due Tuesday, followed by the Producer Price Index later in the week. Those releases could shape expectations for the Fed and, by extension, gold’s near-term direction.
Monday’s U.S. data offered little market disruption. Existing Home Sales rose 0.2% in April to a seasonally adjusted annual rate of 4.02 million, according to the National Association of Realtors. More important for bullion is the broader rates picture. Morgan Stanley’s Global Head of Macro Strategy, Matt Hornbach, said the bank does not expect the Federal Reserve to cut interest rates in 2026. That view broadly matches money market pricing, which suggests the Fed may remain on hold this year as well.
Markets have also scaled back expectations for multiple rate cuts, and some forecasts now range from limited easing to no cuts at all in 2026. For gold, that matters because higher rates raise the opportunity cost of holding a non-yielding asset.
From a chart perspective, gold appears stuck in consolidation mode. Momentum remains broadly positive but flat, with the Relative Strength Index signaling a bullish bias without strong acceleration. For bulls, the key upside hurdle is the 50-day simple moving average at $4,769. A break above that would bring the 100-day SMA near $4,772 into view, followed by the $4,800 psychological mark. On the downside, initial support sits at $4,700. If that level breaks, traders may look to the 20-day SMA around $4,694, with deeper weakness potentially opening the way toward the May 4 swing low near $4,500.In other words, gold remains boxed in: supported by geopolitical unease, but capped by sticky inflation concerns and a higher-for-longer policy backdrop.
Despite the recent volatility, many market watchers remain bullish on gold over the medium term. ING analysts see prices reaching $5,000 an ounce by year-end, though they caution that stalled peace talks are creating near-term uncertainty. Others, including strategists at BNP Paribas Fortis, argue the recent pullback is a consolidation phase rather than the end of the broader bull market. The longer-term case rests on familiar pillars: central bank diversification away from U.S. government debt, structurally higher inflation, and continued investor demand for real assets. If geopolitical tensions eventually ease without triggering a lasting inflation shock, some analysts believe gold could resume its climb to fresh record highs.
For now, however, the metal remains caught between haven demand and monetary restraint. Monday’s modest rise captures that tension well: enough uncertainty to support prices, but not yet enough clarity to launch a breakout.