PRECIOUS-Gold falls on oil-driven inflation fears as Trump rejects Iran peace proposal

ReutersMay 11, 2026 10:50 AM

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Trump calls Iran's response to US peace proposal 'unacceptable'
Brent crude oil rises above $103 a barrel
Trump, Xi to discuss Iran among other topics later this week
U.S. April CPI data due on Tuesday

By Noel John

May 11 (Reuters) - Gold fell 1% on Monday, as high oil prices stoked worries over inflation and prolonged high interest rates, while peace talks between the U.S. and Iran remained stalled.

Spot gold XAU= fell 1.1% at $4,664.99 per ounce, as of 1037 GMT. U.S. gold futures GCcv1 for June delivery lost 1.2% to $4,673.30.

U.S. President Donald Trump on Sunday rejected Iran's response to a proposal for peace talks to end the war, saying Tehran's demands were "totally unacceptable."

Brent crude rose above $103 a barrel amid concerns the conflict will drag on, keeping shipping through the Strait of Hormuz paralyzed. O/R

"Inflation risks still weigh heavy on the market's collective mind, as attempts to end the Middle East conflict reached an impasse after the U.S. and Iran rejected each other's peace proposals," said Han Tan, chief market analyst at Bybit.

Bullion has fallen more than 11% since the U.S.-Israeli war on Iran began late February, pressured by higher oil prices. Rising oil prices stoke inflation, increasing the likelihood of higher interest rates. While gold is seen as an inflation hedge, high rates tend to weigh on the non-yielding asset.

The market awaits Trump's meeting with Chinese President Xi Jinping on Wednesday as the Gulf will be on the agenda.

Investors also eye April's U.S. CPI data on Tuesday, for cues on the Fed's policy path.

"Gold may face greater downward pressure should tomorrow's U.S. CPI prints come in hotter than expected, in turn forcing the Fed to keep its benchmark rates elevated for a longer period of time," Tan said.

Shares of Indian jewellery retailers fell after Prime Minister Modi urged people to refrain from buying gold to protect foreign exchange reserves, stoking fears that that import duties on the metal might be hiked. However, a government source said that India had no plans to hike gold and silver import duties.

Spot silver XAG= was up 0.2% at $80.45 per ounce, platinum XPT= slid 0.8% to $2,039.44, and palladium XPD= was down 0.7% at $1,481.71.

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