Gold rises as dollar and oil decline amid anticipation of a US-Iran agreement

Gold prices rose by more than 1% on Monday as optimism grew over the possibility of a breakthrough in peace negotiations between the United States and Iran, leading to a weaker dollar and lower oil prices, which in turn eased inflation concerns.

Spot gold climbed 1.1% to $4,559.07 per ounce by 07:36 GMT, while US June gold futures rose 0.8% to $4,559.80.

Although US President Donald Trump warned that he was not in a hurry to finalize an agreement with Iran, investors appeared more focused on his remarks on Saturday, when he said Washington and Tehran had “largely completed” a memorandum of understanding on a peace deal that could lead to the reopening of the Strait of Hormuz.

Tim Waterer, chief market analyst at KCM Trade, said: “Trump boosted market hopes for some form of agreement with Iran that could lead to the reopening of the Strait of Hormuz. That possibility pressured oil prices and provided gold with welcome support from an inflation perspective.”

Meanwhile, US Secretary of State Marco Rubio said on Monday that the United States would either reach a “good agreement” with Iran or handle the matter “in another way.”

The dollar fell close to its lowest levels in a week, making gold priced in the US currency less expensive for holders of other currencies.

Oil prices also dropped to their lowest levels in two weeks, easing inflation expectations.

Higher oil prices typically fuel inflation and keep interest rates elevated for longer periods. Although gold is considered a hedge against inflation, higher interest rates usually pressure the yellow metal because it does not generate yield.

In a related development, Kevin Warsh was sworn in as chairman of the US Federal Reserve on Friday at a sensitive moment for the American economy, as sharp increases in fuel prices linked to the war with Iran continue to drive inflation higher and weaken consumer confidence.

As for other precious metals:

Spot silver rose 3.1% to $77.79 per ounce,

Platinum gained 2.3% to $1,966.59,

while palladium climbed 2.7% to $1,384.70 per ounce.