Gold prices declined following an agreement between the United States and Iran to halt mutual attacks. The prior exchanges of fire had tested a fragile peace accord, introducing uncertainty about the potential end to a conflict that has exacerbated global inflationary pressures.

The price of gold fell as much as 2.2%, nearing the $4,000 per ounce mark, before paring some of those losses. U.S. President Trump stated that peace negotiations with Iran are scheduled to resume on Tuesday in Doha.

Since the outbreak of war in late February, gold has dropped more than 23%, briefly falling below $4,000 last week. The surge in energy prices triggered by the conflict has heightened expectations that central banks will maintain higher interest rates for longer, which is a negative factor for non-yielding assets like gold. Oil prices saw a slight increase on Monday.

Despite signs of renewed tensions in the Strait of Hormuz, gold has held above $4,000. "This suggests marginal dip-buying has returned and is willing to defend this level," said Justin Lin, an analyst at Global X ETFs in Australia. "I expect gold's resilience to Middle East turmoil to grow, particularly now that it has fully erased all its gains for the year and most short-term profit-seeking investors have likely exited."

Last week, the United States released inflation data that, while high, was within analyst expectations. Richmond Federal Reserve President Tom Barkin warned on Sunday that inflation remains too high, though he also noted early signs that price pressures might soon begin to ease.

At the time of writing, spot gold was down 1.5% at $4,026.65 per ounce. Silver fell 1.9% to $58.05 per ounce. Platinum prices declined, while palladium edged higher. The U.S. Dollar Spot Index was largely flat.