Gold prices rose more than 1% on Monday as optimism surrounding US-Iran peace talks weighed on the dollar and pushed oil prices lower, improving the outlook for inflation and supporting demand for the safe-haven metal.
Spot gold was up 1.1% at $4,559.07 per ounce as of 0736 GMT, while US gold futures for June delivery rose 0.8% to $4,559.80.
“Trump has been raising market hopes for some sort of deal with Iran, which could lead to the reopening of the Strait of Hormuz. That prospect has weighed on oil prices and, by extension, given gold a welcome lift from an inflation perspective,” said Tim Waterer, chief market analyst at KCM Trade.
The optimism followed remarks by US President Donald Trump, who said Washington and Iran had “largely negotiated” a memorandum of understanding on a peace deal that could reopen the Strait of Hormuz, a key global shipping route.
The US dollar slipped to its lowest level in a week, making dollar-priced gold more affordable for investors holding other currencies and supporting demand for bullion.
Oil prices also eased to two-week lows, easing concerns over inflationary pressure in global markets. Analysts say lower energy costs tend to reduce inflation expectations, which can influence interest rate decisions.
While gold is often viewed as a hedge against inflation, higher interest rates typically reduce its appeal because it does not yield returns.
“The US will either have a good agreement with Iran or deal with the country ‘another way,’” US Secretary of State Marco Rubio said on Monday.
Investors remain cautious, however, as uncertainty continues over whether diplomatic progress will translate into a lasting agreement.
In other precious metals, silver rose 3.1% to $77.79 per ounce, platinum gained 2.3% to $1,966.59, and palladium increased 2.7% to $1,384.70.
Erizia Rubyjeana
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