Gold rises as dollar weakens after Iran submits a proposal to end the war

Gold rose slightly on Monday, supported by a weaker dollar after a report said Iran had submitted a new proposal to end the war with the United States, reviving hopes of de-escalation in the Middle East.

By 0407 GMT, spot gold had risen 0.4 percent to $4,726.62 per ounce. During the past week, the precious metal lost 2.5 percent, ending a four-week winning streak.

US gold futures for June delivery settled at $4,742.

The dollar weakened, supporting the precious metal, after a report said Iran had submitted to the United States, through Pakistani intermediaries, a new proposal regarding reopening the Strait of Hormuz and ending the war.

Kyle Rodda, chief financial markets analyst at Capital.com, said: "We are now watching to see if there is any progress in the (US-Iran) talks in the coming days — that would be the biggest driver for gold."

US President Donald Trump said on Sunday that Iran can call if it wants to negotiate to end the war that has been ongoing for two months, and stressed that it will never possess a nuclear weapon, after Tehran said the United States must remove obstacles to reaching a deal, including its blockade of Iranian ports.

Trump cancelled on Saturday a trip that two US envoys were scheduled to take to Pakistan, which is mediating peace talks with Iran, dealing a blow to peace prospects after the Iranian foreign minister left Islamabad having only spoken with Pakistani officials.

Oil prices rose as the stalling of peace talks between the United States and Iran prolonged disruption to energy exports in the Middle East.

Investors are now watching for the Federal Reserve's interest rate decision on Wednesday after its two-day meeting.

Rodda said: "That could be supportive for gold or an additional headwind, depending on whether the Fed signals it sees scope to keep monetary policy on hold for the rest of the year due to the inflationary effects of the energy crisis."

For other precious metals, spot silver rose 1 percent to $76.45 per ounce, platinum gained 0.7 percent to $2,025.20, and palladium fell 0.2 percent to $1,493.50.