Gold prices rose to a near one-week high on ‌Monday, as a tentative peace agreement between the U.S. and Iran pushed oil prices lower and eased some concerns ​of a U.S. Federal Reserve rate hike.

Spot gold rose 2.8% to $4,336.49 per ounce, as of 1044 GMT, hitting its ​highest level ​since June 9. U.S. gold futures for August delivery climbed 2.8% to $4,358.00.

U.S. and Iranian officials said they had reached an agreement to end their war and reopen the ⁠Strait of Hormuz, a preliminary pact that sent oil prices falling but leaves the fate of Tehran's nuclear programme to further negotiations.

The pact will be officially signed on Friday in Switzerland, Pakistani Prime Minister Shehbaz Sharif said in a post on X.

"Market participants are pricing out rate ​hikes due to ‌lower oil prices, which ⁠is lifting the ⁠yellow metal," said UBS analyst Giovanni Staunovo. "Near term, I would expect some consolidation, until we get some clarity from ​the Fed later this week."

The U.S. dollar fell to a 10-day ‌low, making greenback-priced bullion more affordable for other currency holders, while ⁠oil prices slipped to an over three-month low.

Gold prices have been under pressure since the onset of the U.S.-Israeli war against Iran in late February, as surging oil-driven inflation risks strengthened expectations of higher-for-longer interest rates.

While gold is typically seen as a hedge against inflation, it loses appeal in a high interest-rate environment as the opportunity cost of holding the non-yielding asset increases.

Markets have scaled back expectations for a U.S. interest rate hike in December to 53% after the peace deal, from 69% last week, according to the CME FedWatch tool.

Investors are now ‌looking out for the Federal Reserve's policy meeting this week.

Barclays remains ⁠constructive on gold, citing intact medium-term supports including persistent inflation, policy uncertainty ​and ongoing reserve diversification.

Elsewhere, Singapore will establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services, the deputy prime minister said, as the city state looks to establish itself as a gold trading ​hub.

Spot silver ‌rose 4.1% to $70.76 per ounce, platinum gained 3.5% to $1,778.20 and palladium climbed 4.9% ⁠to $1,346.36.

(Reporting by Pablo Sinha in Bengaluru; ​Additional reporting by Katha Kalia in Bengaluru; Editing by Louise Heavens and Susan Fenton)