Gold Prices Rally As Middle East Tensions Ease

(RTTNews) - Gold prices were sharply higher on Thursday, and the dollar index was subdued amid optimism over a potential U.S.-Iran peace deal and easing concerns about inflationary pressures.

Spot gold surged nearly 1 percent to $4,735.74 an ounce while U.S. gold futures for June delivery were up more than 1 percent at $4,742.64.

Oil prices continued to fall, with Brent crude prices trading below $99 a barrel after U.S. President Donald Trump said he has had "very good talks" with Iran over the past 24 hours and it is "very possible" that there will be a deal before his scheduled trip to China next week.

At the same time, Trump threatened to resume bombardment if negotiations fail apart. Tehran said it was reviewing the latest peace proposal and exchanging diplomatic messages via mediator Pakistan.

U.S. and Iranian diplomats are working on an agreement to restart negotiations, the Wall Street Journal reported.

Saudi Arabian state-owned news site AI Arabiya said intense talks are continuing to establish a framework for opening the Strait of Hormuz.

Earlier, reports emerged that the U.S. and Iran are getting close to an agreement on a one-page memorandum of understanding.

Axios reported that the deal would include Iran committing to a moratorium on nuclear enrichment and both sides lifting restrictions around transit through the Strait of Hormuz.

Easing Middle East tensions weighed on the dollar as investors await the all-important U.S. non-farm payrolls report on Friday for more insights into the economic and rate outlook.

New York Fed President John Williams said he believes the Federal Reserve policy is well positioned to deal with a high level of economic uncertainty generated by the war in the Middle East. He anticipates interest rate cuts once inflation eases.