Gold slipped in early Asian trading as the U.S. dollar rallied following the collapse of weekend U.S.-Iran peace talks. A firmer greenback makes the metal pricier for investors holding other currencies, weighing on demand. Spot gold fell 1.9% to $4,656.29 an ounce, its lowest level in weeks. Traders cited the breakdown as a catalyst for risk aversion, pushing the dollar index above 105.

The failed diplomacy also nudged crude oil higher, reviving inflation concerns that could prompt central banks to tighten policy. Higher oil prices tend to lift broader commodity costs, reinforcing pressure on non‑interest‑bearing assets like gold. Energy markets responded swiftly, with Brent crude climbing roughly 2% as supply‑risk premiums rose, significantly tightening.

With the dollar now firming against major peers, fund managers trimmed gold exposure and shifted capital into higher‑yielding dollar assets. The move underscores how geopolitical setbacks can quickly translate into currency and commodity volatility, squeezing returns for portfolios that rely on safe‑haven demand. Analysts warn further escalation could keep the dollar elevated, prolonging pressure on gold.