PRECIOUS-Gold falls on oil-driven inflation worries as US–Iran peace talks falter

May 11 (Reuters) - Gold prices fell on Monday, as a lack of progress in U.S.–Iran peace negotiations pushed oil prices higher, fuelling concerns that elevated inflation could keep interest rates higher for longer.

FUNDAMENTALS

Spot gold XAU= fell 0.6% at $4,687.49 per ounce, as of 0038 GMT.

U.S. gold futures GCcv1 for June delivery lost 0.7% at $4,696.60.

The dollar firmed, making greenback-priced bullion more expensive for holders of other currencies. USD/

U.S. President Donald Trump on Sunday rejected Iran's response to a U.S. proposal for peace talks, dashing hopes for an imminent end to the 10-week-old conflict that has caused widespread damage in Iran and Lebanon, paralyzed maritime traffic in the Strait of Hormuz, and driven up global energy prices.

Oil prices jumped $3 a barrel on Monday as the Strait of Hormuz remained largely closed, keeping global energy supplies tight. O/R

The ongoing war with Iran and its shock to oil prices and supplies have rocketed to the top of the list of concerns for financial stability, according to a semi-annual Federal Reserve report released on Friday.

Federal Reserve Bank of Chicago President Austan Goolsbee said on Friday the future of monetary policy could include interest rate increases.

Meanwhile, China's gold production fell in the first quarter of 2026 versus the same period a year earlier, the China Gold Association said on Saturday, as safety inspections led some smelters to suspend production for maintenance.

Gold demand in India was muted last week, as a price recovery prompted potential buyers to postpone purchases, while China premiums remained steady on safe-haven demand. GOL/AS

Gold speculators raised net long position by 4,090 contracts to 95,664 in the week to May 5. CFTC/

Spot silver XAG= was steady at $80.32 per ounce, platinum XPT= slid 0.9% to $2,037, and palladium XPD= was down 1% at $1,477.23.