By: Economy Middle east

Gold prices climbed more than 2 percent on Wednesday, supported by a softer dollar and lower oil prices, which helped ease concerns about inflation and the prospect of interest rates staying higher for longer, as hopes grew for a U.S.-Iran peace deal.

Spot gold rose 2.1 percent to $4,653.95 per ounce as of 9:25 a.m. UAE time, while U.S. gold futures for June delivery gained 2.13 percent to $4,665.80.

UAE gold prices moved sharply higher on the day, with local rates showing broad-based gains. 24-carat gold increased by AED11.50 to AED560.00 per gram. Also, 22-carat rose by AED10.75 to AED518.75, 21-carat advanced by AED10.25 to AED497.25. Additionally, 18-carat gained AED8.75 to AED426.25, and 14-carat climbed by AED7.00 to AED332.50.

Dollar and oil soften

U.S. President Donald Trump said on Tuesday that he would briefly pause an operation to help escort ships through the Strait of Hormuz, citing progress toward a comprehensive agreement with Iran.

The U.S. dollar and crude oil prices softened after Trump suggested that a possible peace deal could be reached to end the war with Iran. U.S. Secretary of State Marco Rubio told reporters on Tuesday that “operation Epic Fury is concluded,” adding that “we’re not cheering for an additional situation to occur.”

A weaker U.S. currency makes dollar-priced metals cheaper for buyers using other currencies. Higher crude prices can fuel inflation, increasing the likelihood of elevated interest rates. While gold is traditionally seen as an inflation hedge, higher interest rates can make yield-bearing assets more attractive, limiting gold’s appeal.

Payrolls awaited

Moreover, investors are now waiting for the U.S. non-farm payrolls release later this week, which will help show whether the economy remains strong enough to keep the Federal Reserve‘s policy unchanged.

Among other precious metals, spot silver rose 3.47 percent to $75.64 per ounce, platinum gained 2.13 percent to $2,009.25, and palladium increased 2.18 percent to $1,534.50.