By: Economy Middle east

Gold prices rose on Friday and were on track for a weekly gain as concerns over inflation and higher interest rates eased, while investors remained optimistic about a potential U.S.-Iran peace deal despite renewed attacks between the two countries.

Spot gold gained 0.36 percent to $4,716.26 per ounce as of 4:29 GMT, bringing its weekly increase so far to 2.19 percent. Meanwhile, U.S. gold futures for June delivery rose 0.30 percent to $4,725.20, up 1.73 percent for the week.

In the UAE, gold rates marked a notable increase, with 24-carat gold rising AED3.5 to AED568.5 and 22-carat gold increasing AED3.5 to AED526.5.

Additionally, 21-carat gold gained AED3.25 to AED504.75, and 18-carat gold edged up AED2.75 to AED432.75.

Meanwhile, 14-carat gold ticked up AED2.25 to AED337.5.

Gold prices rise on renewed tensions

Gold prices rose as the United States and Iran exchanged fire on Thursday in the most significant challenge so far to their month-long ceasefire. However, Iran later said the situation had stabilized, while the U.S. stated that it was not seeking further escalation.

The U.S. Central Command said on Thursday that American forces had targeted Iranian military sites allegedly involved in launching attacks on warships passing through the Strait of Hormuz. Earlier, Iran accused the U.S. of breaching the ceasefire by carrying out strikes on several targets in and around the strait.

However, U.S. President Donald Trump said the ceasefire with Iran remained intact, adding that it would be clear if the truce had collapsed. The U.S. military also stressed that American forces were not seeking further escalation, a stance that weighed on the U.S. dollar’s safe-haven appeal and provided support for gold prices.

Investors eye key U.S. employment report

Gold prices have declined by more than 10 percent since the conflict began in late February, largely due to rising oil prices. Higher crude prices can fuel inflation, increasing expectations that interest rates may remain elevated or rise further.

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

Gold prices extended their gains on Friday despite an uptick in the U.S. dollar index, which gained 0.17 percent to 98.24.

Markets are now awaiting the release of the monthly U.S. employment report later on Friday for further clues on the Federal Reserve’s monetary policy path this year.

Other precious metals

As gold prices rose, the broader precious metals market rose on Friday. Spot silver climbed 1.71 percent to $79.82 per ounce, while platinum advanced 1.50 percent to $2,052.35. Palladium also rose 1.62 percent to $1,504.87 per ounce.