Gold futures closed lower on Monday, following gains in the previous two trading sessions. Renewed tensions between the US and Iran over the weekend pushed crude oil prices higher, sparking market concerns about rising inflation and interest rates, which in turn pressured the non-yielding asset gold. After a series of clashes, both nations ultimately agreed to pause recent hostilities, which had at one point threatened negotiations aimed at ending the conflict. The rise in energy prices due to geopolitical conflict has intensified market worries about inflation and higher interest rates, which typically weigh on gold, an asset that does not generate interest income.

Concurrently, the US Dollar Index recorded its largest monthly gain in nearly a year, adding further pressure on gold. A stronger dollar makes dollar-denominated gold more expensive for overseas buyers. ADM Investor Services noted in a report that gold prices remain under pressure as traders adopt a wait-and-see approach regarding the prospects of US-Iran talks, while the recent escalation in conflict has resurfaced the risk of potential renewed increases in energy prices.

Goldman Sachs global head of commodities research, Samantha Dart, stated in a report that a hawkish Federal Reserve is diminishing the theme of currency devaluation, and the market has already begun pricing in Fed rate hikes this year due to inflation concerns. Despite these short-term headwinds, "the gold trade is not over yet."

"We remain positive on further upside for gold, driven by both structural and cyclical factors," Dart wrote. "Structurally, the diversification of emerging market central banks following the freezing of the Central Bank of the Russian Federation's assets in 2022 remains the core rationale for our year-end 2026 gold price target of $4,900 per ounce."

Goldman Sachs also cited a recent survey by the World Gold Council, noting that among the 76 central banks surveyed between February and May, a record 45% expect to increase their gold reserves further over the next 12 months. The Comex gold near-month contract (for July delivery) fell 1.4% on Monday, settling at $4,022.30 per ounce, while the near-month silver contract dropped 1.7% to settle at $58.175 per ounce, both marking their second-lowest settlement prices of the year.