Gold climbs over 3 per cent as MiddleEast peace hopes drag down dollar, oil

Gold prices climbed over 3 per cent on Wednesday to hit their highest in over a week, as prospects of a US-Iran peace deal dragged down the dollar and oil prices, alleviating inflationary pressures that had underpinned bets on higher-for-longer interest rates, reports Reuters.

Spot gold jumped 3.2 per cent to $4,703.09 per ounce, as of 0938 GMT, its highest since April 27. US gold futures for June delivery rose 3.2 per cent to $4,714.

Iran will only accept "a fair and comprehensive agreement" in its negotiations with the US on ending the war, its foreign minister said on Wednesday, as US President Donald Trump cited "great progress" in the process.

Trump said on Tuesday he would briefly pause an operation to help escort ships through the Strait of Hormuz.

"A timely peace deal allowing the normalisation of shipping through the Strait of Hormuz would alleviate inflationary pressures and create the conditions for the Federal Reserve to cut rates in 2026," said ActivTrades analyst Ricardo Evangelista.

"In a scenario of normalisation in the Persian Gulf, gold prices may regain some bullish momentum as the dollar weakens and yields soften. Such a scenario could allow the precious metal to revisit levels above $5,000 and approach $5,500 by year-end," Evangelista added.