On Sunday evening, President Donald Trump rejected Iran's response to a proposal aimed at ending the war and reopening the Strait of Hormuz.
This development coincided with signs of resilience in the U.S. economy, as oil futures increased by nearly 4.88%, following a gap-up opening at the start of the week.
As I discussed in my previous analysis, 'Gold: Gap Opening Likely to Be Driven by Uranium, Hormuz, and Hezbollah' on May 9, 2026, similar market dynamics were observed.
Gold futures started today with a gap-down opening, as de-escalation seems to be on the back foot now, with NATO and the US set to address the Hormuz Crisis.
U.S. President Donald Trump will visit China for a summit with President Xi Jinping between May 13 and 15, Chinese state media reported on Monday.
The summit will mark the first major visit to Beijing by a U.S. leader in nearly a decade and is aimed at helping mend strained ties between the world's largest economies.
Trump and Xi are expected to discuss disputes over trade tariffs, Taiwan, and the war in Iran. The two are likely to extend a trade truce signed in October.
On evaluating the movements of the gold futures on an hourly chart, I anticipate that a potential slide is likely to continue by gold futures, as maintain this slide at a 70-degree angle after a gap-down of approximately 1.10% today due to higher oil prices.
Currently, gold futures have pierced the significant support at the 200 EMA ($4,676), and are heading to test the next target at $4,568.76, where a breakdown below this could push the futures to test the next support at $4,546 in today's session.
Iran's response to a U.S. 14-point proposal for ending the war was relayed to the American side by Pakistani mediators on Sunday, but Tehran has rejected U.S. demands to dismantle its nuclear facilities and would not suspend uranium enrichment for 20 years, the Wall Street Journal reported, citing sources.
U.S. President Donald Trump quickly flashed out at the Iranian response on official media, calling it "totally unacceptable."
In its multi-page counter-proposal, Iran proposed an end to the war and a gradual reopening of the Strait of Hormuz to commercial vessels, with the U.S. also lifting its blockade of Iranian ships, the report said.
Markets had previously advanced on optimism that Washington and Tehran could reach an agreement to ease tensions in the Gulf and reopen shipping routes around the Strait of Hormuz, through which roughly a fifth of global oil consumption passes.
However, the latest impasse revived fears that negotiations could fall through.
I conclude that the current scenario looks evident enough for escalation of this war from both sides, and could continue to keep the oil prices strong this year as the global economy has been dented by this war till now, and could continue to feel its shadow for a long time.
Disclaimer: Readers are advised to take any position in gold and oil at their own risk, as this analysis is solely based on observations.