Khaberni - Gold prices rose more than 1% on Wednesday, supported by the weakening dollar, while the decline in oil prices eased inflation fears and the continued rise of interest rates for an extended period, amid hopes of reaching a peace agreement between the United States and Iran.
Gold prices in spot transactions increased by 1.7% to $4633.31 per ounce by 02:25 GMT.
Also, the American futures contracts for gold delivery in June rose by 1.7% to $4643.20.
U.S. President Donald Trump said on Tuesday that he would temporarily stop the process of escorting ships through the Strait of Hormuz, indicating progress towards reaching a comprehensive agreement with Iran.
Senior market analyst at OANDA, Kelvin Wong said, "Gold rose as oil prices declined due to a decrease in geopolitical risk premium, after the United States confirmed that the fragile ceasefire currently between it and Iran is still valid, despite the clashes that occurred at the beginning of this week."
Dollar and crude oil prices declined after Trump indicated the possibility of reaching a peace agreement to end the war with Iran.
The weakening of the American currency leads to a decrease in prices of metals priced in dollars for holders of other currencies.
Meanwhile, rising crude oil prices can fuel inflation, thereby increasing the likelihood of interest rate increases.
While gold is considered a hedge against inflation, rising interest rates make yield-bearing assets more attractive, reducing the demand for gold.
U.S. Secretary of State Marco Rubio told reporters on Tuesday that "Operation Wrath of Fury has ended."
Investors are now waiting for the release of the non-farm payroll report in the United States this week, which will test whether the economy is still resilient enough to keep the Federal Reserve's monetary policy unchanged, or whether a decline in the labor market might revive the argument for lowering interest rates.
For other precious metals, the spot price of silver rose 2.7% to $74.80 per ounce, the price of platinum increased by 1.7% to $1986.25, and the price of palladium rose by 2.1% to $1516.44.
