Gold dropped about 1% in Asian trading on Monday, pulling back after gains of more than 2% last week. The move came after President Donald Trump rejected Iran’s latest response to a U.S. peace proposal.
Trump called Tehran’s counter-offer “totally unacceptable.” Iran had refused to dismantle its nuclear facilities or suspend uranium enrichment for 20 years, according to the Wall Street Journal.
Iran did offer to gradually reopen the Strait of Hormuz and end the conflict. It also agreed that some of its highly enriched uranium would be diluted and the rest sent to a third country. But that was not enough for Washington.
"I have just read the response from Iran’s so-called 'Representatives.' I don’t like it — TOTALLY UNACCEPTABLE! Thank you for your attention to this matter." -President DONALD J. TRUMP pic.twitter.com/MIQDS9Ujjy
— The White House (@WhiteHouse) May 10, 2026
Spot gold fell to $4,669.82 an ounce by early Monday. U.S. gold futures also dropped, falling to $4,678.31.
The Strait of Hormuz remains closed. That stretch of water is one of the world’s most important oil shipping routes. Its continued closure pushed oil prices up nearly 5% in early trade.
Higher oil prices feed into broader inflation concerns. When inflation looks likely to stay high, central banks tend to keep interest rates elevated.
That is bad news for gold. The metal pays no interest, so it becomes less attractive when rates stay high and investors can earn more from other assets.
Soojin Kim from MUFG said markets are now pricing in higher rates to deal with inflation risks tied to elevated energy prices. That is putting direct pressure on gold.
Strong U.S. jobs data from last week added to that pressure. The payrolls report came in better than expected, which supports the view that the Federal Reserve will hold rates higher for longer.
The U.S. Dollar Index rose 0.2% in Asian hours. A stronger dollar also weighs on gold, as it makes the metal more expensive for buyers using other currencies.
Investor attention is now turning to upcoming U.S. inflation data. Any surprise in those numbers could shift expectations around Fed policy.
Trump is also traveling to China later this week to meet President Xi Jinping. Iran, trade, and global energy security are all on the agenda.
Silver edged up 0.2% to $80.51 per ounce. Platinum fell 1.4% to $2,030.04 per ounce.
Copper was mixed. London benchmark copper futures rose 0.3% to $13,608.33 a ton, while U.S. copper futures gained 0.4% to $6.32 a pound.
Gold had risen on hopes of a U.S.-Iran deal last week. Those hopes have now faded, but the inflation and rate outlook is now the bigger force pushing the metal lower.
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