By: Economy Middle east

Gold prices extended their gains for a third straight session on Thursday, supported by a weaker dollar and rising hopes of a potential peace agreement between the United States and Iran.

Spot gold rose 0.32 percent to $4,698.49 per ounce as of 4:32 GMT, after climbing nearly 3 percent on Wednesday to reach its highest level since April 27. Meanwhile, U.S. gold futures for June delivery gained 0.14 percent to $4,701.

In the UAE, gold rates declined, with 24-carat gold falling AED0.5 to AED566 and 22-carat gold declining AED0.5 AED524.

Additionally, 21-carat gold declined AED0.5 to AED502.5, and 18-carat gold lost AED0.25 to AED430.75.

Meanwhile, 14-carat gold eased AED0.25 to AED336.

Gold gains as U.S. dollar falls

Iran said on Wednesday it was reviewing a U.S. peace proposal that would formally end the war while leaving unresolved Washington’s key demands for Tehran to halt its nuclear program and reopen the Strait of Hormuz.

The U.S. dollar slipped 0.02 percent to 98.01, making gold more affordable for holders of other currencies, while benchmark 10-year U.S. Treasury yields have fallen 0.6 percent so far this week, reducing the opportunity cost of holding the non-yielding metal.

Meanwhile, Brent crude prices have dropped around 6 percent this week amid growing optimism over a potential end to the Middle East conflict.

“The metals have staged a price recovery amid easing Middle East tensions, with President Trump announcing a temporary pause on Project Freedom, a plan to provide a safe passage for vessels through the Strait of Hormuz to allow for some time for a diplomatic breakthrough with Iran,” said Vijay Valecha, Chief Investment Officer, Century Financial.

Investor attention turns to U.S. monthly employment report

Gold prices have declined more than 10 percent since the outbreak of the war in late February. Higher oil prices can fuel inflationary pressures, raising the possibility of increased interest rates. Although gold is traditionally viewed as a hedge against inflation, higher rates tend to reduce the appeal of the non-yielding asset.

Investors are now turning their attention to Friday’s U.S. monthly employment report for further clues on whether the economy remains strong enough for the Federal Reserve to keep interest rates unchanged. The report comes after recent remarks from Federal Reserve officials underscored concerns that the conflict in the Middle East could continue to drive inflation higher and disrupt global supply chains.

“Tailwinds for prices were added by the drop in the odds of a 25-bps rate hike by the end of the year, from 28.9 percent to 20.6 percent within a day, as per the CME FedWatch Tool, benefiting non-yielding metals,” Valecha added.

Other precious metals

As gold prices rose on Thursday, the precious metals market witnessed upward momentum. Spot silver gained 0.40 percent to $77.64 per ounce, while platinum fell 0.30 percent $2,054.70. Palladium, meanwhile, gained 0.12 percent to $1,539.21 per ounce.