Gold prices rose by more than 2% during trading on Wednesday, supported by a decline in the US dollar and lower oil prices, while signs of easing tensions between the United States and Iran boosted investors' appetite for the precious metal.

This increase came after statements by US President Donald Trump in which he confirmed that he would temporarily halt the military operation to escort ships through the Strait of Hormuz, indicating progress towards a comprehensive agreement with Iran.

Oil and dollar declines revive gold prices

Kelvin Wong, senior market analyst at OANDA, explained that gold benefited from the decline in oil prices as a result of the lower geopolitical risk premium, after the United States confirmed the continuation of the fragile truce with Iran despite the limited clashes that took place in the region at the beginning of the week.

He added that the decline in oil and dollar prices came after Trump hinted at the possibility of reaching a peace agreement to end the war with Iran, which eased the anxiety in global markets.

US Secretary of State Marco Rubio told reporters that Operation Epic Rage had ended, stressing that Washington was not seeking further escalation in the region.

Investor movements and market expectations

Wong noted that any return to escalation between the United States and Iran could prompt investors to take profits from gold, especially short-term speculators who have built up large buying positions recently.

Gold typically benefits from a weak US dollar, as a decline in the US currency makes dollar-denominated metals less expensive for investors holding other currencies, thus boosting global demand for them.

Conversely, higher oil prices often fuel inflationary pressures, which may prompt central banks to keep interest rates high for longer, which usually puts pressure on gold because yield-bearing assets become more attractive compared to the non-yielding metal.

Watch for US jobs data

Investors are now turning their attention to the US jobs data due later this week, particularly the non-farm payrolls report, which will be an important test of the strength of the US economy.

This data is of great importance because it may determine whether the Federal Reserve will continue to hold interest rates steady or open the door to any new monetary moves in the coming months.

If the data shows continued strength in the US labor market, this could reinforce the likelihood of maintaining a tight monetary policy, which could limit gold's gains later on.

Gold at settlement yesterday

Gold prices rose at the close of trading on Tuesday, as investors assessed the prospects for a fragile truce in the Middle East and the potential impact of conflict on inflation rates and interest rate expectations.

Gold futures for June delivery rose 0.77%, or $35.20, to $4,568.50 an ounce.

Gold now

Gold rose 2.34% in spot trading to $4,664 an ounce.

Meanwhile, US gold futures for June delivery rose 2.32% to $4,674.

Collective gains for precious metals

The gains were not limited to gold, as spot silver prices rose 3.4% to $75.62 an ounce.

Platinum also rose by 2.4% to $1,999.95, while palladium climbed by 2.6% to $1,524.59.