WASHINGTON (dpa-AFX) - Gold prices have tumbled on Monday as the U.S. and Iran vacillate from their respective stances on peace talks while the Strait of Hormuz remains effectively shut, thereby amplifying supply disruption and inflation-related concerns.
Front Month Comex Gold for June month delivery has sharply declined by $54.10 (or 1.14%) to $4,686.80 per troy ounce.
Front Month Comex Silver for June month delivery has slumped by $1.333 (or 1.74%) to $75.345 per troy ounce.
Investors continue to exercise caution as the U.S.-Iran stalemate following a war between the two nations since February 28 continues with no resolution in sight, with Pakistan's mediation yet to achieve any breakthrough.
U.S. President Donald Trump called the first round of peace talks, which were held in Islamabad, Pakistan on April 11-12, 'a failure.'
However, after a few days, Trump agreed (at Pakistan's request) for another round of negotiations over the past weekend.
The U.S. team was readying to visit Pakistan, with Trump announcing U.S. envoy Steve Witkoff and his son-in-law Jared Kushner as U.S. representatives.
Markets anticipated some positive outcome from the second round after Iran's Foreign Minister Abbas Araghchi confirmed his visit to Pakistan.
However, Trump suddenly cancelled the trip by U.S. envoys on Saturday, delivering a new setback.
As a result, confusion crept up as Abbas left Islamabad after talking only with Pakistan's Prime Minister Shehbaz Sharif and other high-level officials though Araghchi called the visit 'very fruitful.'
The President of Iran, Masoud Pezeshkian conveyed to Sharif by phone that Iran would not agree to 'imposed negotiations.'
Trump stated that the draft proposal offered by Iran was not acceptable and said that travel to Pakistan involves too much time and expense but of no avail.
Trump asserted that there was 'tremendous confusion' within the Iranian regime and stated that Iran should call telephonically and convey their plans if they wish to. Trump asserted that while the 'U.S. has all cards, Iran has none.'
As tensions escalated, Iran's Vice President Esmail Saghab Esfahani stated that Iran would inflict four times damage to any country backing any damage to Iran's oil infrastructure.
As a result of this extended impasse, the Strait of Hormuz remains blocked.
First, transit of ships was shut by Iran immediately after the war erupted. Later, Trump ordered a naval blockade on all Iranian ports.
Supply disruption concerns are heightening due to this twin-blockade with crude oil prices soaring, keeping alive inflationary concerns.
Iran has reportedly conveyed to the U.S. through mediators demanding an immediate end of war with guarantees to prevent resumption of attacks against Iran (as well as Lebanon), negotiation on managing the Strait of Hormuz, and that only after an agreement is made on those two issues, Iran would discuss the nuclear issue.
Trump has insisted the U.S. would never allow Iran to have nuclear weapons.
This deadlock prevailing for nearly two months now has created a 'fluidic' situation for investors.
Elsewhere in the Middle East, tensions renewed after Israel attacked Hezbollah targets in Lebanon despite an extended ceasefire for three weeks as agreed by both nations last week.
With oil transit coming to a halt and inflationary concerns on the rise, investors have retracted expectations of any rate cut in the U.S. Federal Reserve's upcoming meeting this week and anticipate the Bank of Japan, the European Central Bank, and the Bank of England to follow suit.
The increasing macroeconomic uncertainty is weighing on gold value.
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