Spot gold prices fell sharply from their intraday high during the Asian trading session on Tuesday, May 12, with the price currently hovering around $4,720 per ounce. The decline was triggered by comments from U.S. President Donald Trump, who stated that the ceasefire agreement with Iran was "on life support," which spurred a surge in oil prices and, combined with a stronger U.S. dollar, pushed gold lower. Investors are now focused on the upcoming U.S. Consumer Price Index (CPI) data for April.

Earlier in the session, gold had reached a high of $4,773.61 per ounce, representing a drop of more than $50 from that peak.

President Trump described Iran's response to last week's U.S. peace proposal as "a pile of garbage" and indicated that the fragile truce in the Strait of Hormuz was "on life support," casting doubt on any near-term resolution to the conflict. Trump remarked, "I would say this ceasefire is on very serious life support, like a doctor walking in and saying, 'Sir, your loved one has about a 1% chance of survival.'"

Additionally, CNN reported on Monday evening that President Trump is growing increasingly frustrated with Iran's handling of the war-ending negotiations. Some of his aides noted he is now more seriously considering resuming large-scale military operations than he has been in recent weeks. Sources familiar with the discussions said Trump is impatient with the continued closure of the Strait of Hormuz and believes divisions within Iran's leadership are preventing substantive concessions in nuclear talks. Iran's recent response was viewed by Trump as "completely unacceptable" and "foolish," leading several officials to question whether Tehran is willing to adopt a serious negotiating stance.

Analysts at ING commented in a report, "This setback injects uncertainty into the ceasefire timeline, keeping inflation risks elevated and reinforcing expectations for 'higher-for-longer' interest rates—an expectation that has consistently pressured gold throughout the conflict."

Meanwhile, stock markets advanced as traders focused on optimism driven by artificial intelligence developments, largely shrugging off the slow progress in the Strait of Hormuz situation. Nicky Shiels, Head of Trading & Alchemy Research and Metals Strategy at MKS PAMP, noted, "As the market reaction evolves and fades, the 'correlation between oil and gold naturally weakens.'"

Following a surge of over 7% in silver prices on Monday, triggered by reports of a liquidity crisis at a state-owned oil company in Peru—one of the world's largest silver producers—prices showed little change during the Asian session on Tuesday.

Focus on U.S. CPI Data Trump's comments on the Iran ceasefire come ahead of Tuesday's crucial U.S. inflation report. Economists anticipate a significant rise in the Consumer Price Index, as price spikes stemming from the Iran war ripple through manufacturing and agriculture sectors. Analysts forecast that the U.S. headline CPI for April will increase by 0.6% month-on-month and 3.7% year-on-year, with the core CPI expected to rise 2.7% annually.

Ahead of the report's release, Trump once again emphasized addressing cost-of-living issues, taking action on rising beef and gasoline prices that could threaten his party's control in Congress.

In the Asian session on Tuesday, silver prices edged down 0.1% to $85.94 per ounce. Platinum and palladium also declined. The Bloomberg Dollar Spot Index rose 0.2%.