Bullion traded near US$4,698 an ounce, after rising around 2% last week.

Peace progress was derailed again after Trump labelled 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 April 8.

A drone strike on Sunday briefly set a cargo vessel ablaze off Qatar in the Persian Gulf. The UAE and Kuwait also said they had intercepted hostile drones.

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

Current Federal Reserve (Fed) chair Jerome Powell’s tenure is set to end this week. His term has been marked by his resistance against political influence.

Threats to the Fed’s independence have been a key factor contributing to gold’s rally early this year.

Data released 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%.

This offers the Fed 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 0.4% to US$4,697.85 an ounce as of 7.50am in Singapore.

Silver was down 0.1% to US$80.24. Platinum and palladium declined.

The Bloomberg Dollar Spot Index, a gauge of the US currency, was up 0.1%.