LONDON: Gold rose more than 1% on Monday, after U.S. and Iran officials said they had reached a deal to end their conflict, pushing oil prices lower and easing concerns about inflation and higher interest rates.
Spot gold was up 1.8% at $4,297.42 per ounce, as of 0010 GMT, its highest level since June 9. U.S. gold futures for August delivery rose 1.9% to $4,318.10.
U.S. and Iranian officials said on Sunday they had agreed on a peace framework for a deal to end their war, halt the U.S. blockade of Iran and reopen the Strait of Hormuz.
The pact will be officially signed on Friday in Switzerland, Pakistani Prime Minister Shehbaz Sharif said in a post on X.
Oil prices slipped more than 4% and the U.S. dollar fell to a 10-day low following the announcement.
Gold prices have been under pressure since the start of the U.S.-Israeli war against Iran in late February. The effective closure of the Strait of Hormuz has led to a sharp increase in global oil prices, stoking inflation concerns and raising expectations of interest rates staying higher for longer.
Though traditionally seen as an inflation hedge, gold loses appeal in a high interest-rate environment as the opportunity cost of holding the non-yielding asset increases.
Markets see a 64% chance of a U.S. interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.
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