Gold prices rose by more than 1% on Wednesday, supported by a weaker U.S. dollar, while falling oil prices eased inflation concerns and expectations of prolonged higher interest rates amid hopes for a peace agreement between the United States and Iran.
Spot gold climbed 1.7% to $4,633.31 per ounce by 02:25 GMT.
U.S. gold futures for June delivery also rose 1.7% to $4,643.20 per ounce.
U.S. President Donald Trump said on Tuesday that he would temporarily suspend the operation escorting ships through the Strait of Hormuz, citing progress toward a comprehensive agreement with Iran.
Kelvin Wong, Senior Market Analyst at OANDA, said: “Gold rose as oil prices declined due to lower geopolitical risk premiums, after the United States confirmed that the fragile ceasefire with Iran remains in place despite clashes earlier this week.”
The U.S. dollar and crude oil prices weakened after Trump signaled the possibility of a peace agreement to end the conflict with Iran.
A weaker dollar generally makes dollar-priced metals cheaper for holders of other currencies.
At the same time, higher crude oil prices can fuel inflation, increasing the likelihood of higher interest rates. While gold is considered a hedge against inflation, rising interest rates make yield-bearing assets more attractive, reducing demand for gold.
U.S. Secretary of State Marco Rubio told reporters Tuesday that “Operation Epic Rage is over.”
Investors are now awaiting the release of the U.S. nonfarm payrolls report later this week, which could indicate whether the economy remains resilient enough for the Federal Reserve to maintain its monetary policy stance, or whether labor market weakness may revive calls for interest rate cuts.
Among other precious metals:
* Silver rose 2.7% to $74.80 per ounce
* Platinum gained 1.7% to $1,986.25 per ounce
* Palladium climbed 2.1% to $1,516.44 per ounce
Reuters
