Gold Prices Rise Over 1% Amid Dollar and Oil Decline as US-Iran Talks Draw Attention

Gold prices increased by over 1% during Monday's trading session, buoyed by a decline in the US dollar and lower oil prices, while investors closely monitored signs of rapprochement between Washington and Tehran and the possibility of an agreement that could reopen the Strait of Hormuz and end months of tension.

Spot gold advanced 1.1% to reach $4559.29 per ounce by 03:59 GMT, while US gold futures for June delivery rose 0.8% to $4560.30 per ounce.

The gains were driven by the weakening of the dollar, which made the precious metal more attractive to investors holding other currencies, coinciding with oil prices dropping to their lowest levels in two weeks.

US Official Links Sanctions Relief to Strait of Hormuz Reopening

Tim Worther, chief market analyst at KCM Trade, told Reuters that statements by US President Donald Trump have bolstered market hopes for a possible deal with Iran, which could lead to reopening the Strait of Hormuz and easing pressures on energy markets.

He explained that the fall in oil prices eased inflation concerns, providing an additional boost to gold as a safe haven amid current market volatility.

On Sunday, Trump said he instructed his team not to rush into signing any agreement with Iran, despite having stated the previous day that the two sides had "largely negotiated" a memorandum of understanding for a potential peace deal.

Although disagreements persist between the parties on key issues, markets responded positively to calming signals, which pushed oil prices down, while gold benefited from rapid shifts in investor expectations regarding inflation and interest rates.

European Commission Calls for Strait of Hormuz Opening and Preventing Iran’s Nuclear Armament

Investors are also watching US monetary policy directions following Kevin Warsh's swearing-in as chairman of the Federal Reserve Board, during a sensitive phase for the US economy facing inflationary pressures linked to rising fuel prices amid the Iranian crisis.

In other precious metals, silver rose 2.8% to $77.61 per ounce, platinum increased 1.9% to $1958.35, and palladium climbed 2.3% to $1379.31 per ounce.