Lead

Gold prices held steady near $4,500 per ounce on Monday as the U.S. dollar weakened, reflecting concerns that a Middle East energy shock could spark a second wave of inflation. The market backdrop was further shaped by the U.S. government’s decision to appoint Kevin Warsh as the next Federal Reserve chairman and by the latest U.S.–Iran talks over oil sanctions relief, which have stalled amid disagreements over the terms.

Background

Gold is a traditional safe‑haven asset that often rises when the U.S. dollar falls or when inflation worries intensify. The dollar’s decline has been driven by fears that the conflict in the Middle East could disrupt oil supplies and push prices higher, reigniting inflationary pressures that the Federal Reserve has been battling. In parallel, the U.S. Treasury has been negotiating with Iran over temporary relief from oil sanctions, a key issue that could influence global oil markets and, by extension, commodity prices.

What Happened

On Monday, gold prices steadied after dipping below $4,500 per ounce. The U.S. dollar weakened amid speculation that the energy shock from the Middle East conflict could trigger a second wave of inflation. Meanwhile, U.S. officials reported that Iran’s latest proposal to the United States was deemed “insufficient for a deal” by the White House, according to a senior U.S. official. In a separate development, President Donald Trump announced that Kevin Warsh would be sworn in as the next Federal Reserve chairman on Friday, May 22, at the White House.

Market & Industry Implications

The dollar’s decline has supported gold, as investors seek a hedge against potential inflation. The uncertainty surrounding the U.S.–Iran oil sanctions negotiations could further weigh on the dollar if a resolution is delayed, potentially keeping gold at elevated levels. The appointment of Kevin Warsh as Fed chairman may signal continuity in monetary policy, but the market will watch for any shifts in the Fed’s stance on inflation and interest rates, which could influence the dollar and commodity prices.

What to Watch

  • Kevin Warsh’s inaugural address and policy statements as Fed chairman on Friday, May 22.
  • Progress in U.S.–Iran negotiations over temporary oil sanctions relief, particularly any new proposals that could move the talks forward.
  • Future U.S. dollar strength and gold price movements in response to evolving Middle East tensions and inflation expectations.