Gold retreats on inflation fears

May 11, 2026 (MLN):  Gold prices slipped Monday as stalled diplomatic efforts between the United States and Iran kept geopolitical tensions simmering, sending oil prices surging and reigniting fears that stubborn inflation could force the Federal Reserve to keep borrowing costs elevated.

Currently, spot gold is down by 1.22% to $4,663.12 an ounce as of [10:50 am] PST, according to data reported by Mettis Global.

The precious metal came under pressure from a strengthening dollar, which climbed as risk sentiment soured.

A firmer greenback typically weighs on gold since it makes the commodity pricier for buyers using other currencies, dampening demand across international markets, according to Reuters.

At the center of Monday's market anxiety was the Strait of Hormuz, the critical Persian Gulf waterway through which a significant share of the world's oil supplies flow.

With the passage remaining largely blocked amid the ongoing geopolitical standoff, crude oil prices surged, adding fresh fuel to global inflation concerns.

That dynamic put gold in a difficult position. Although the metal has long been regarded as a reliable hedge during periods of rising prices, its appeal fades when interest rates climb, since gold generates no yield, it struggles to compete with interest-bearing assets in a high-rate environment.

Attention is now turning to Thursday's release of the U.S. Consumer Price Index for April, which traders hope will shed light on where inflation  and by extension, Federal Reserve policy is headed in the coming months.

Elsewhere in the precious metals complex, silver bucked the downward trend, edging up 0.4% to $80.61 per ounce. Platinum and palladium, however, both declined, falling 0.7% to $2,041.66 and 0.6% to $1,482.46, respectively.

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