Gold rose more than 1% on Monday as hopes of a peace deal to end the Iran war sent the dollar and oil prices lower, easing fears of inflation and higher-for-longer interest rates. Spot gold was up 1.1% at $4,559.69 an ounce by 0931 GMT and U.S. gold futures for June delivery gained 0.9% to $4,561.30. U.S. markets were closed for Memorial Day.
Get the latest news from India and how it matters to the world with the Reuters India File newsletter. Sign up here. The market remained optimistic despite the U.S. and Iran playing down the chances of an imminent deal after U.S. President Donald Trump had said on Saturday that the two countries had largely negotiated a memorandum of understanding on an agreement that would reopen the Strait of Hormuz.
The two sides remain at odds on several difficult issues that must be resolved if they are to bring an end to the three-month-old war. Equities rallied while oil prices fell below $100 a barrel and hit two-week lows, with the dollar hovering around a one-week low. "Financial assets are strongly influenced by oil prices at present, and gold prices are not an exception," said UBS analyst Giovanni Staunovo. "Lower oil prices lift gold, in anticipation that it impacts the monetary policy of the Federal Reserve," Staunovo said, adding that he expects this trend to continue in the near term.
Gold has fallen by about 14% since the Iran war began in late February, supported by elevated energy prices that have sparked inflation concerns and the prospect of higher U.S. interest rates
