Khaberni - Gold fell on Tuesday, as investors watch the impact of the conflict in the Middle East and the stumbling peace talks between the United States and Iran on the expectations of interest rate decisions by central banks meeting this week.
Gold dropped in spot transactions by 0.2% to $4670.89 per ounce by 03:50 GMT.
US futures for gold delivery in June fell by 0.2% to $4684.70.
A US official said that President Donald Trump is not pleased with the latest Iranian proposal to end the war ongoing for two months, which weakened hopes for a settlement of the conflict that has affected energy supply flows, exacerbated inflation, and claimed thousands of lives.
Edward Meer, an analyst at Marex said, "Geopolitical developments remain the main driver (of gold prices).
In the event of reaching an agreement (between the United States and Iran) or an interim agreement, the dollar is expected to drop and gold is likely to rise"
The dollar rose and oil prices hovered above $109 a barrel, as the vital Strait of Hormuz remains nearly completely closed.
The rise in crude prices can fuel inflation by increasing transportation and production costs, thus raising the probability of interest rate hikes. While gold is a hedge against inflation, increased interest rates make yield-bearing assets more attractive, reducing the appeal of gold.
The Federal Reserve is highly expected to keep interest rates unchanged tomorrow, Wednesday, at the end of its two-day meeting.
Investors will also focus on decisions from other central banks this week, including the European Central Bank, the Bank of England, and the Bank of Canada.
As for other precious metals, silver in spot transactions fell by 1.2% to $74.61 per ounce, platinum remained steady at $1984.19, and palladium dropped by 0.9% to $1463.
