Gold prices rose on Thursday, supported by a weaker dollar, while investors weighed growing optimism over a potential US-Iran deal to end the war that has pushed up energy prices and fuelled fears of higher inflation.
Spot gold rose 0.7% to $4,821.44 per ounce by 0301 GMT. US gold futures for June delivery gained 0.4% to $4,844.40.
The US dollar hovered near its lowest level in six weeks, making greenback-denominated commodities, including bullion, more affordable for holders of other currencies, while benchmark 10-year US Treasury yields eased 0.1%.
"The primary driver (for gains in gold) is the optimism about a US-Iran ceasefire," said Kelvin Wong, a senior market analyst at OANDA.
"If we start to see a break above $4,900, further potential upside cannot be ruled out towards the next intermediate resistance zone, which is at the psychological level of $5,000."
The Trump administration expressed optimism on Wednesday about reaching a deal to end the war with Iran, while warning of increasing economic pressure against Tehran if it remains defiant.
President Donald Trump said he believes the war he launched with Israel in late February is nearly over, even as a shipping blockade he announced came into effect and traffic through the Strait of Hormuz remained well below normal levels.
Spot gold prices have fallen more than 8% since the Iran war began in late February amid concerns that elevated energy prices could feed into inflation and keep global interest rates higher.
While gold is considered a hedge against inflation, higher interest rates weigh on the non-yielding metal's demand.
In the US, traders now see a 29% chance of a 25-basis-point interest rate cut this year. Before the war, there were expectations of two reductions for this year.
Spot silver rose 1.7% to $80.41 per ounce, platinum gained 1.2% to $2,135.58, and palladium was up 0.9% at $1,587.39.
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