Gold fell as President Donald Trump rejected Iran’s latest peace offer to end the 10-week conflict choking the Strait of Hormuz, fanning inflation fears as weekend clashes in the Middle East threatened a fragile ceasefire.

Bullion traded near $4,689 an ounce, after rising around 2% last week. Peace progress was derailed again after Trump labeled Iran’s latest response to his proposal to end the conflict as “totally unacceptable.” The setback may keep the inflation risk elevated as well as the expectation for higher interest rates, which weigh on non-yielding bullion.