Gold prices fell on Thursday, pressured by a stronger dollar and elevated oil prices that stoked inflation worries, as investors tried to assess the conflict direction from stalled U.S.-Iran talks.
Spot gold was down 0.6% at $4,706.49 per ounce. U.S. gold futures for June delivery fell 0.6% to $4,727.
The dollar inched higher, making greenback-priced bullion more expensive for holders of other currencies, while benchmark 10-year U.S. Treasury yields rose to an over one-week high, raising the opportunity cost of holding non-yielding bullion.
"Gold continues to take its cues from the oil market, with rising energy costs keeping the risk of near-term dollar strength and elevated inflation in focus," said Ole Hansen, head of commodity strategy at Saxo Bank.
Iran seized two ships in the Strait of Hormuz as it tightened its grip on the strategic waterway after U.S. President Donald Trump announced he was indefinitely calling off attacks, with no sign of peace talks restarting.
Iranian officials did not say they had agreed to any extension of the truce, accusing Washington of violating it by maintaining a blockade on Iranian trade by sea.
Brent crude oil prices rose above $100 a barrel on the stalled peace talks and as both nations maintained their restrictions on the flow of trade through the strait.
Higher crude oil prices can add to inflationary pressures, increasing the likelihood that interest rates remain elevated. While gold is often seen as an inflation hedge, higher rates dampen bullion's appeal as it offers no yield.
Meanwhile, a Reuters poll of economists showed the U.S. Federal Reserve will likely wait at least six months before cutting interest rates this year as war-driven energy shocks reignite already-elevated inflation.
"The current consolidation appears more a pause driven by rate uncertainty than a structural shift, and we maintain the view that gold is likely to reach a fresh record high later this year or in early 2027," Hansen added.