WASHINGTON (dpa-AFX) - Extending the losses from yesterday's session, gold prices have tumbled on Tuesday after the U.S. administration's reluctance to accept Iran's peace plan diminished the expectations of a solution to the gulf crisis. While Iran is working on revising its proposal, the Strait of Hormuz continues to remain blocked.
Front Month Comex Gold for June month delivery has slumped by $91.20 (or 1.94%) to $4,602.50 per troy ounce.
Front Month Comex Silver for June month delivery has tumbled by $2.056 (or 2.73%) to $73.235 per troy ounce.
In the ongoing war between the U.S. and Iran, on April 8, Trump announced a ceasefire on all attacks against Iran.
Pakistan hosted a meeting between the U.S. and Iranian delegates on April 11-12 that turned out to be a failure.
Despite imposing a naval blockade on ships entering or exiting Iran's ports soon after this, Trump agreed to a second round of peace talks. However, Iran refused to participate unless the U.S. lifts the blockade.
Last week, Trump announced that envoys from the U.S. were readying to visit Pakistan for a second round of talks. Iran's Foreign Minister Abbas Araghchi also confirmed visiting Pakistan and expectations of an end to the conflict energized the markets.
Suddenly, Trump called off the meeting and asserted that since the U.S. has all the cards while Iran has none, sending envoys all the way to Pakistan was a waste of time. Trump remarked that Iran can call the U.S. anytime to convey their intentions.
On Monday, Iran sent (through Pakistani officials) a peace plan to discuss with the U.S. which Trump analyzed with his top security advisers. The White House did not officially elaborate on the fate of the proposal.
According to the key tenets of the plan, Iran is ready to reopen the Strait of Hormuz if the U.S. lifts its naval blockade on Iranian ports. Iran also wishes to discuss the most contentious issue of 'Iran's nuclear programs' with the U.S. at a later stage.
Quoting an anonymous official, Reuters reported that Trump was unhappy with Iran's new plan.
With the U.S. administration showing little interest to settle the crisis quickly, supply related concerns drove crude oil prices higher.
Earlier, CNN reported that Trump was unlikely to accept the plan.
Today, citing 'sources close to the mediation process,' CNN reported that mediators in Pakistan are awaiting a revised proposal from Iran. The deadlock could break depending on how clos the revised plan aligns with the U.S. demands.
While containing Iran's nuclear program is crucial for Trump, restarting the oil and energy traffic by reopening the Strait of Hormuz is on top of other priorities for gulf nations.
Members of the Gulf Cooperation Council have scheduled a meeting today to discuss the ongoing developments in the gulf crisis.
Elsewhere in the Middle East, despite a ceasefire agreement, Israeli forces have not ceased targeting Hezbollah militants.
The Israeli Defense Forces have ordered residents of nearly 16 towns and villages in southern Lebanon to evacuate immediately to nearby Sidon neighborhood.
The closure of Strait of Hormuz continued to push oil prices higher.
In addition, the ongoing Israel-Lebanon conflict restrained investors from making big moves.
The U.S. Federal Reserve opened its two-day meeting today. Market participants have wound up expectations of any rate cut.
A nearly 3.00% surge in crude oil prices and a strong U.S. dollar value weighed on gold.
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