By: Economy Middle east

Gold prices rose on Thursday, supported by a weaker U.S. dollar, as investors weighed increasing optimism over a potential U.S.-Iran agreement to end the war that has driven energy prices higher and intensified inflation concerns.

As of 4:30 GMT, spot gold gained 0.55 percent to $4,828.18 per ounce, while U.S. gold futures for June delivery increased 0.50 percent to $4,847.60.

In the UAE, gold rates posted notable increases, with 24-carat gold rising AED3.5 to AED581.5 and 22-carat gold increasing AED3.25 to AED538.5.

Additionally, 21-carat gold edged up AED3 to AED516.25, while 18-carat gold rose AED2.75 to AED442.5.

Meanwhile, 14-carat gold gained AED2.25 to AED345.25.

U.S. dollar hovers near a six-week low

Gold prices rose as the U.S. dollar hovered near a six-week low, making dollar-denominated commodities more affordable for holders of other currencies. The U.S. dollar index, which tracks the greenback against a basket of major currencies, fell 0.11 percent to 97.95.

The Trump administration expressed optimism on Wednesday about securing a deal to end the war with Iran, while cautioning that economic pressure on Tehran would intensify if it continues to resist.

President Donald Trump said he believes the conflict he launched with Israel in late February is nearing its conclusion, even as a newly announced shipping blockade took effect and traffic through the Strait of Hormuz remained significantly below normal levels.

“Gold has in the last week settled into a wide $250 range, currently approaching the upper end with resistance sighted near $4,850. The move reflects a gradual stabilization following last month’s liquidity-driven sell-off, where a combination of rising yields, a stronger dollar and forced deleveraging weighed heavily on prices,” said Ole Hansen, Head of Commodity Strategy, Saxo Bank.

Fed rate cut bets rise

Spot gold prices have declined by more than 8 percent since the onset of the Iran war in late February, as concerns grew that higher energy prices could fuel inflation and keep global interest rates elevated.

Although gold is typically viewed as a hedge against inflation, rising interest rates tend to reduce the appeal of the non-yielding metal.

In the United States, traders now assign a 29 percent probability to a 25-basis-point interest rate cut by the Federal Reserve this year. Prior to the war, markets had anticipated two rate cuts over the same period.

“The macro backdrop has turned incrementally more supportive. Fed funds futures have once again begun to price in rate cuts, while both the U.S. dollar and real yields have drifted lower,” added Hansen.

“This shift has helped gold recover, but not yet enough to deliver a clear directional signal. For now, price action remains contained, with key resistance still located near $4,850, the 50 percent retracement of the 1,500-dollar correction that unfolded between late January until the through on 23 March. A sustained break above this level would likely be required to trigger renewed momentum and systematic buying from trend-following strategies,” he added.

Other precious metals

As gold prices rose, the precious metals market witnessed upward movement on Thursday. Spot silver climbed 1.90 percent to $80.55 per ounce, platinum rose 1.49 percent to $2,141.21 and palladium gained 1.12 percent to $1,590.49.