Gold prices retreated as investors monitored developments in the Middle East conflict and the stalled peace talks between the United States and Iran, alongside anticipation of interest rate decisions from central banks this week.

The yellow metal recorded a decline of 0.2% in spot transactions to $4,670.89 per ounce, while June delivery futures fell by the same percentage to $4,684.70.

This decline comes amid continued tensions, after the US President expressed dissatisfaction with an Iranian proposal to end the two-month-long war, weakening hopes for a settlement, at a time when the crisis has affected energy supplies and contributed to rising global inflation.

Analysts believe that geopolitical developments remain the primary driving factor for gold prices, as any progress in negotiations could lead to dollar weakness and support for the yellow metal.

Meanwhile, the dollar continues to rise, while oil prices hover above $109 per barrel, with the Strait of Hormuz remaining almost completely closed.

Rising oil prices contribute to increased inflationary pressures by raising transportation and production costs, enhancing the likelihood of monetary policy tightening. Although gold is considered a safe haven hedge against inflation, rising interest rates reduce its attractiveness compared to yield-bearing assets.

It is widely expected that the Federal Reserve will keep interest rates unchanged at the conclusion of its upcoming meeting tomorrow.