REUTERS

Gold prices climbed more than 2 percent ‌on Wednesday after US President Donald Trump indicated a possible peace deal may be reached with Iran, sending the dollar and crude lower as inflation concerns ebbed somewhat.

Spot gold jumped 2.7 percent to $4,680.91 per ounce, ​as of 0811 GMT, having hit its highest since April 28. US gold ​futures for June delivery rose 2.7 percent to $4,693.20.

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

Iran will only accept “a fair and comprehensive ​agreement” in its negotiations with the US on ending the war in the Middle East, its foreign minister said on Wednesday.

Gold gained as “oil prices retreated on reduction in geopolitical risk premium, after the US ​confirmed that the ongoing fragile ceasefire between Iran is still intact, despite the skirmish that ​was seen at the start of this week,” Kelvin Wong, a senior market analyst at OANDA, said.

“Any signs ‌of re-escalation of tension between the two of them, you will see gold prices seeing some form of profit-taking, or for short-term speculators to unwind their near-term net long position in gold,” Wong added.

A weaker US currency makes dollar-priced metals cheaper for holders of other ​currencies.

Elevated crude oil prices ​can stoke inflation, increasing the likelihood of higher interest rates. While gold is considered an inflation hedge, high interest rates make yield-bearing assets more attractive, weighing ​on its appeal.

Investors await US non-farm payrolls later this week which will ​test whether the economy remains resilient enough to keep the Federal Reserve’s monetary policy on hold.

“Factors such as economic growth risks, worsening geopolitical relations, currency volatility and downside risks to equity markets will continue ​to support gold’s role as a portfolio diversifier,” ANZ ​said in a note.