Gold (XAU/USD) traded with mild losses around $4,605 during early Asian trading hours on Monday, as investors monitored ongoing geopolitical tensions in the Middle East [1]. Bloomberg reported that mediation efforts to end the Iran war continued, but US President Donald Trump indicated that Tehran’s latest peace proposal might not be sufficient. Trump also announced that the US would begin guiding neutral ships trapped in the Persian Gulf through the Strait of Hormuz starting Monday [1]. In response, an Iranian official warned that US interference in Hormuz would be considered a violation of the ceasefire, emphasizing that the Strait of Hormuz and the Persian Gulf are not places for rhetoric [1].
The article notes that escalating tensions in the Middle East could fuel inflation fears and reduce the likelihood of interest rate cuts, which may weigh on gold prices. While gold is traditionally seen as a safe-haven asset during geopolitical uncertainty, its lack of yield makes it less attractive when interest rates are high [1]. However, strong demand from central banks, particularly the Reserve Bank of India (RBI), may help limit gold’s downside. The RBI has focused on repatriating gold, bringing over 100 metric tons back to India for the third consecutive year, and currently holds approximately 880 metric tons as of end-March 2026 [1].
The article also highlights that central banks are the largest holders of gold, with emerging economies such as China, India, and Turkey rapidly increasing their reserves. In 2022, central banks added 1,136 tonnes of gold worth around $70 billion to their reserves, marking the highest yearly purchase since records began, according to the World Gold Council [1].
No specific analyst opinions or forward-looking statements regarding gold price direction were provided, but the article suggests that ongoing geopolitical risks and central bank demand will remain key factors to watch [1].
CONCLUSION
Gold prices have edged lower to $4,605 amid heightened Middle East tensions and uncertainty over US and Iranian actions in the Strait of Hormuz. While geopolitical risks and central bank demand continue to influence the market, the outlook remains cautious as investors await further developments.