Gold jumps over 2% as Middle East peace hopes lift bullion and push oil, dollar lower

Gold prices climbed more than 2% on Wednesday, May 6, asourceser U.S. President Donald Trump indicated a potential peace deal could be reached with Iran, helping to weaken the U.S. dollar and push crude oil prices lower.

Spot gold rose 2.7% to $4,680.91 per ounce by 0811 GMT, its highest level since April 28. U.S. gold futures for June delivery gained 2.7% to $4,693.20.

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.

Gold benefited as oil prices retreated on a reduction in the geopolitical risk premium and the U.S. confirmed a fragile ceasefire remained intact, easing inflation concerns. A weaker dollar also makes dollar-denominated commodities such as gold cheaper for buyers using other currencies.

Investors are awaiting U.S. non-farm payrolls data later this week for clues on the resilience of the economy and what it could mean for the Federal Reserve’s policy outlook.