Gold prices climbed on Tuesday as an interim US-Iran peace deal eased concerns over rising oil prices and inflation, reducing expectations of further interest rate hikes by the US Federal Reserve, according to media reports.
Spot gold rose 0.3% to $4,318.89 an ounce by 10:30 am ET (1430 GMT), after touching its highest level since June 5 in the previous session. Prices had gained more than 1% earlier in the day.
The interim agreement extends a fragile ceasefire between the US and Iran by another 60 days and allows the reopening of the Strait of Hormuz, a key oil route affected by the conflict.
The deal pushed oil prices lower, with Brent crude falling below $80 a barrel for the first time since early March after dropping nearly 5% on Monday.
Lower energy prices have eased inflation concerns, reducing market expectations of another Fed rate hike later this year. Expectations for a December rate increase have fallen to around 60% from nearly 70% earlier.
Gold had been under pressure due to concerns that higher oil prices could keep inflation elevated and encourage tighter monetary policy. Since gold does not offer interest returns, it usually faces pressure in a high interest rate environment.
Investors are now watching upcoming central bank decisions, including the Federal Reserve’s interest rate announcement on Wednesday.
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