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Gold climbed to a two-week high on Thursday, buoyed by a weaker dollar and falling oil prices as hopes of a peace deal between the U.S. and Iran tempered inflation and rate-hike concerns.
Spot gold gained 1% to $4,735.32 per ounce, as of 0934 GMT, after rising to its highest since April 23. U.S. gold futures for June delivery rose 1.1% to $4,745.90.
"It's all to do with oil prices, which when they go down, tend to push up bond prices, which depresses yields because investors are now reducing expectations of rate hikes from central banks, and that in turn is supporting assets like gold and silver," said Fawad Razaqzada, market analyst at City Index.
U.S. President Donald Trump predicted a swift end to the war with Iran as Tehran considered a U.S. peace proposal that sources said would formally end the conflict while leaving unresolved key U.S. demands that Iran suspend its nuclear programme and reopen the Strait of Hormuz.
Stocks rose on Thursday, while oil prices sank on renewed hopes for a peace deal that could bring a gradual reopening of the strait.
The dollar hovered near its lowest in more than two months, hit in the previous session, making bullion less expensive for holders of other currencies.
Benchmark 10-year U.S. Treasury yields eased, reducing the opportunity cost of holding gold.
Markets trimmed bets on U.S. Federal Reserve rate hikes by December to around 12% from 16% on Wednesday, according to CME Group's FedWatch.
Investors are now awaiting the monthly U.S. employment report on Friday to assess how the Fed will move forward with monetary policy this year.
Meanwhile, China's central bank loaded up on gold for an eighteenth straight month, with its reserves amounting to 74.64 million fine troy ounces by the end of March, versus the previous month's 74.38 million.
Spot silver rose 3.4% to $79.93 per ounce, platinum was up 1.2% at $2,085.70, and palladium gained 1% to $1,553.16. All metals were at a more than two-week high.
(Reporting by Pablo Sinha in Bengaluru; Editing by Shilpi Majumdar)
