Gold falls as Trump’s rejection of Iran proposal to end war fans inflation fears

Published Mon, May 11, 2026 · 08:00 AM

GOLD fell as US President Donald Trump rejected Iran’s latest peace offer to end the 10-week conflict choking the Strait of Hormuz, fanning inflation fears as clashes over May 9 and 10 in the Middle East threatened a fragile ceasefire.

Bullion traded near US$4,689 an ounce, after rising around 2 per cent in the week ended May 10. Peace progress was derailed again after Trump labeled Iran’s latest response to his proposal to end the conflict as “totally unacceptable.” The setback may keep the inflation risk elevated as well as the expectation for higher interest rates, which weigh on non-yielding bullion. 

Weekend attacks in the Middle East also underscored the fragility of the ceasefire that began on Apr 8. A drone strike on Sunday (May 10) briefly set a cargo vessel ablaze off Qatar in the Persian Gulf. The United Arab Emirates and Kuwait also said they had intercepted hostile drones.

Looking ahead, US consumer price data due Tuesday is likely to affirm inflation remains a threat in the country, following March’s biggest monthly advance since 2022.

Data released on Friday showed that US employers added to payrolls for a second month in April, marking the first back-to-back advance in nearly a year, and the unemployment rate held steady at 4.3 per cent. This offers the US Federal Reserve space to keep interest rates unchanged for the foreseeable future as they focus on fresh inflationary risks from the war with Iran. 

Spot gold fell 0.6 per cent to US$4,689.29 an ounce as of 6:37 am in Singapore. Silver was down 0.8 per cent to US$79.67. Platinum and palladium declined. The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.1 per cent. BLOOMBERG