Gold drifts lower as stalled US-Iran talks, hawkish Fed outlook pressure prices

Gold price (XAU/USD) declines to near $4,535, snapping the two-day winning streak during the early Asian session on Monday. The precious metal loses ground amid the lack of progress in the US-Iran peace negotiations. Traders will closely monitor the Middle East developments as the tensions in the region are ongoing. 

Reuters reported on Sunday that Iranian officials said that talks with the US are continuing, but no nuclear commitments have been made. Meanwhile, Iran's parliament speaker and top negotiator, Mohammad Bagher Ghalibaf, stated that Tehran will not accept any deal with Washington unless it ensures “the rights of the Iranian people are secured.”

As the diplomatic exchanges continued, Israel expanded its ground attack in Lebanon, shattering a brittle truce with its northern neighbor.

Federal Reserve (Fed) policymakers continued on Friday to signal the central bank may need to raise interest rates in the future if the war in the Middle East leads to a persistent increase in already-high inflation. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.

Traders await the US May employment data on Friday for fresh impetus. This report could offer some hints as to whether the US economy is strong enough to push the Fed to lift interest rates by next year.