Gold prices climbed on Thursday, supported by a softer US dollar as investors assessed increasing optimism over a possible US-Iran agreement that could end the conflict and ease inflation concerns driven by high energy prices.
Spot gold gained 0.7% to $4,821.44 per ounce, while US gold futures for June delivery rose 0.4% to $4,844.40.
The US dollar hovered near a six-week low, making dollar-priced commodities like gold more affordable for other currency holders, while benchmark 10-year US Treasury yields edged down by 0.1%.
“The primary driver (for gains in gold) is the optimism about a US-Iran ceasefire,” said Kelvin Wong, a senior market analyst at OANDA.
“If we start to see a break above $4,900, further potential upside cannot be ruled out towards the next intermediate resistance zone, which is at the psychological level of $5,000.”
The Trump administration signaled optimism on Wednesday about reaching a deal to end the conflict with Iran, while cautioning that economic pressure on Tehran would intensify if talks fail.
President Donald Trump said the war launched with Israel in late February could be nearing its end, even as a shipping blockade remains in place and traffic through the Strait of Hormuz stays below normal levels.
Gold prices have declined more than 8% since the start of the Iran conflict, as rising energy costs raised concerns about inflation and the likelihood of higher global interest rates.
Although gold is typically viewed as a hedge against inflation, higher interest rates tend to reduce demand for the non-yielding asset.
In the US, traders are currently pricing in a 29% chance of a 25-basis-point rate cut this year, compared to earlier expectations of two rate reductions before the conflict began.
Other precious metals also moved higher, with spot silver rising 1.7% to $80.41 per ounce, platinum gaining 1.2% to $2,135.58, and palladium increasing 0.9% to $1,587.39.
