Gold edged lower on Monday, trading near $4,155 in early Asian hours, as renewed US-Iran tensions and hawkish signals from the Federal Reserve weighed on the safe-haven metal. The price slipped about $5 from the previous close as traders digested conflicting signals from geopolitical and monetary policy fronts.
US-Iran talks falter
President Donald Trump over the weekend threatened strikes on Iran if Hezbollah continues attacks on Israel, casting doubt on the peace talks in Switzerland. Iranian negotiators suspended the high-stakes discussions with Washington after Trump's verbal threats, though sources familiar with the matter said talks were still ongoing behind the scenes. The uncertainty has rattled markets, but gold's rally following the initial US-Iran peace deal proved short-lived, according to Tim Waterer, chief market analyst at KCM Trade.
Fed hawkishness dents gold appeal
The dollar's resurgence, powered by the Fed's newly hawkish tone under Kevin Warsh, has stolen the spotlight from gold, Waterer added. Higher interest rates make the yield-less metal less attractive, and the market now sees no US rate cut this year, prompting Goldman Sachs to lower its gold price forecast. The bank projects gold at $4,900 per ounce by December, down from its earlier estimate of $5,400, as the Fed's stance reduces the metal's upside.