Gold prices were subdued on Monday, pressured by a stronger dollar and the collapse of U.S.-Iran talks over the weekend, which fueled inflation concerns and clouded the outlook for future interest rate cuts.
Spot gold fell 0.4% to $4,728.59 in early trading after hitting its lowest since April 7 earlier in the session. U.S. gold futures dropped 0.7% to $4,752.20.
The U.S. dollar drifted higher, making greenback-priced metals more expensive for holders of other currencies.
"It's a very headline-driven market. All eyes are on the price of crude oil because crude oil is going to direct inflation and that is going to direct Federal Reserve policy," said Phillip Streible, chief market strategist at Blue Line Futures.
The U.S. military began a blockade of ships leaving Iran's ports, and Tehran threatened to retaliate against ports of its Gulf neighbors, after weekend talks failed to reach a deal to end the war, leaving a ceasefire in jeopardy.
Oil prices jumped above $100 a barrel. Higher energy prices stoke inflation concerns and limit central banks' room to cut rates. Elevated rates, in turn, reduce the appeal of zero-yield bullion, despite its role as an inflation hedge.
Markets now see about 21% chance of a U.S. rate cut by year-end, according to the CME's FedWatch Tool, down from 40% a month earlier.
"If the Strait of Hormuz remains closed, markets may not follow a typical risk-off pattern, as energy shortages and payment constraints could increase gold's role as a trusted, cross-border settlement asset when currencies are restricted," Paul Wong, market strategist at Sprott Asset Management, said in a note.
Uncertainty over future oil supplies are likely to drive strong structural demand for silver through accelerated investment in solar photovoltaics, he added.
Spot silver fell 2.4% to $74.07 per ounce.
Platinum lost 1.2% to $2,021.28, while palladium firmed 0.4% to $1,527.45.