Gold declined to near $4,000 an ounce after the US and Iran traded attacks in the Persian Gulf, straining a ceasefire that had last week seen energy prices fall to pre-war levels and tempered expectations for an interest-rate hike.
Spot gold was down as much as 0.9% after rising 1.6% on Friday. Oil advanced after a tanker carrying Qatari crude was hit during tit-for-tat assaults over the weekend that hampered shipping through the Strait of Hormuz.
The two sides have since agreed to halt the attacks and meet on Tuesday in Doha, Axios reported, citing unidentified US officials.
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Gold holding above $4,000 despite renewed signs of tension in the strait "suggests marginal dip buyers have returned and are willing to defend this level," said Justin Lin, an analyst at Global X ETFs Australia.
The latest developments in the Middle East come in the wake of US inflation data that, while high, was within analyst estimates. Treasury yields dipped after the US personal consumption expenditures price index, the Federal Reserve's favored inflation gauge, rose 0.4% in May from the previous month.
Gold is down about 23% since the US and Israel launched strikes on Iran in late February, as higher energy prices fueled inflation and raised expectations central banks would keep rates higher for longer, a negative for non-yielding bullion.
"I expect gold to become increasingly resilient to Middle East volatility, especially now that it has completely erased year-to-date gains and fast money investors have likely largely moved on," Lin said.
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Spot gold was down 0.6% at $4,064.47 an ounce at 8:53 a.m. Singapore time. Silver was 1.1% lower at $58.50. Platinum and palladium also retreated. The Bloomberg Dollar Spot Index was marginally higher.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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