Spot gold was down 0.5% at $4,588.71 per ounce

Gold prices nudged lower in thin trade on Monday, ‌weighed down by inflation worries that clouded the U.S. monetary policy outlook, while markets awaited developments in Middle East peace negotiations.

Spot gold was down 0.5% at $4,588.71 per ounce, as of 0655 GMT.

Markets in China, Japan and the UK are closed for ​holidays.

U.S. central bank Chair Jerome Powell closed out eight years as head of ⁠the central bank last Wednesday with interest rates on hold and rising concern about inflation.

Gold is still ​feeling the lingering effects of last week’s hawkish Fed messaging, particularly the notable dissenting voices ​pushing back against further easing, said Tim Waterer, chief market analyst at KCM Trade.

U.S. central bank officials, who dissented against the policy statement last week, said the oil price shock from the Iran war means the central bank should ​be clear it can no longer lean towards interest rate cuts, with a rise in ​borrowing costs possible in the future.

Increasing oil prices could encourage central banks to hold interest rates higher ‌for ⁠longer, which would pressure non-yielding assets such as gold.

Oil prices eased but held above $100 a barrel, with the lack of clarity around a potential Iran-U.S. peace deal remaining in focus.

The U.S. president said the country would start helping to free ships stranded in the Gulf ​by the U.S.-Israeli war ​on Iran from Monday, ⁠as a tanker reported being hit by unknown projectiles in the Strait of Hormuz.

Iranian state media reported that Washington conveyed its response ​to Iran’s 14-point proposal via Pakistan, and that Tehran was now ​reviewing it.

We ⁠see gold largely trading in a $4,400-$5,500 range by year-end. The upper end of that range would require a durable reduction in Middle East tensions and some easing of inflation pressures, while ⁠persistent high ​oil prices would keep the metal toward the lower ​half of the range, Waterer added.