Gold prices fell on Tuesday as renewed US-Iran tensions pushed oil prices higher, raising concerns that inflation could remain elevated and keep interest rates higher for longer.

Spot gold dropped 0.6% to $4,542.20 per ounce by 0401 GMT, while US gold futures for June delivery rose 0.4% to $4,542.80. The move came as investors assessed the impact of fresh US strikes in Iran and ongoing diplomatic efforts involving Tehran, Washington and Qatar.

Iran’s top negotiator and foreign minister were in Doha for talks with Qatar’s prime minister on a possible agreement with the United States to end the three-month conflict, according to an official briefed on the visit. However, both Washington and Tehran played down expectations of an immediate breakthrough.

US forces carried out strikes in southern Iran on Monday, targeting boats allegedly attempting to lay mines and missile launch sites. Washington described the strikes as defensive actions.

Kelvin Wong, senior market analyst at OANDA, said markets were beginning to price in the possibility that damage to Middle East oil production facilities could delay a rapid return to normal oil flows.

Brent crude futures rose 2% in early Asian trading on Tuesday as tensions persisted. Higher oil prices can add to inflationary pressure, which may influence expectations for US Federal Reserve policy.

Gold is often viewed as a hedge against inflation, but higher interest rates can reduce demand for the non-yielding metal. Markets are now pricing in a possible Federal Reserve rate hike before the end of the year, with CME Group’s FedWatch tool showing a 56% chance of a move by December.

Other precious metals also declined. Spot silver fell 1.6% to $76.84 per ounce, platinum slipped 0.8% to $1,952.56, and palladium dropped 1.2% to $1,381.27.

Also Read: Gold Gets Cheaper in Pakistan as Rates Drop on May 20