REUTERS

Gold climbed 1 percent on Thursday, recouping some losses from the previous session after Federal Reserve’s hawkish signals, as a drop in oil prices following a US-Iran interim agreement dampened inflation expectations and provided support.

Spot gold was up 1 percent at $4,297.94 per ounce, as of 0745 GMT. Bullion declined 1.7 percent on Wednesday after the US Fed pointed to a potential rate hike later this year.

US gold futures for August delivery fell 1.5 percent to $4,317.30.

“It’s a bit of short position unwinding (in gold) given yesterday’s steep fall and the reason for the short unwinding is also due to the positive news coming out from the Middle East, which has caused oil prices to fall,” said Kelvin Wong, a senior market analyst at OANDA.

Oil prices fell after the United States and Iran released the text of their interim agreement on Wednesday. The 14-point agreement extends the ceasefire announced in April by another 60 days to allow the two sides to negotiate a final truce. Elevated oil prices stoke inflation concerns and raise expectations of higher interest rates. Gold tends to lose appeal when rates are high, as it does not yield interest.