Gold drifts higher as Iran, US agree to halt war

NEW YORK: Gold prices rose for a third straight session on Monday to an over one-week peak after Iran and the US said they have agreed terms to end their war, a move that eased expectations of higher interest rates.

Spot gold was up 2.60 per cent at US$4,327.82 per ounce by 1:30 p.m. EDT (1730 GMT), after hitting its highest since June 5 earlier in the session.

US gold futures settled 2.70 per cent higher at US$4,351.60.

The US dollar index was down 0.20 per cent, making metals priced in the greenback more affordable for holders of other currencies.

A memorandum of understanding to end the war has been signed by US President Donald Trump, Vice President JD Vance and the speaker of Iran's parliament, a US official said.

Previous reports from both sides had suggested it would be signed officially at a ceremony in Geneva on Friday.

"The gold market is moving past the conflict and pricing it out. The peace deal news took down Treasury yields, the dollar and oil, and those were the biggest inflation and cross-asset risks," said Phillip Streible, chief market strategist at Blue Line Futures.

Gold has faced pressure since the Iran conflict began as high energy prices and inflation concerns raised the chances of interest rate hikes, which tend to weigh on the non-yielding asset.

After the framework deal, traders cut the odds of a US rate hike in December to 58 per cent from nearly 70 per cent last week, according to the CME FedWatch tool.

Attention is now turning to the Federal Reserve's June 16-17 policy meeting, Chair Kevin Warsh's first at the helm, as markets look for clues on the interest-rate outlook.

Gold's next price move all comes down to Warsh, his tone, and what he is going to say about the interest rate path, said Streible.

Meanwhile, Singapore will establish an over-the-counter gold clearing system and introduce central bank gold-vaulting services, the deputy prime minister said.

Among other metals, spot silver rose 3.10 per cent to US$70.09 per ounce, platinum gained 3.20 per cent to US$1,772.85, and palladium jumped 4.90 per cent to US$1,345.98.