Gold futures rise to Rs 1.59 lakh/10g on weak dollar, US-Iran peace deal hopes

Gold prices surged by Rs 426 to Rs 1.59 lakh per 10 grams in futures trade on Monday, driven by optimism over a possible US-Iran peace agreement and a weaker US dollar.

Gold prices climbed by Rs 426 to Rs 1.59 lakh per 10 grams in futures trade on Monday, tracking gains in global markets amid optimism surrounding a possible peace agreement between the US and Iran.

On the Multi Commodity Exchange, the yellow metal for the June delivery increased by Rs 426, or 0.27 per cent, to Rs 1,59,105 per 10 grams in a business turnover of 5,312 lots.

''Gold prices saw a notable uptick on Monday, driven primarily by a weaker US dollar and optimism surrounding a potential US-Iran peace deal,'' Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.

The positive sentiment was further bolstered by easing crude oil prices, with WTI crude holding steady at USD 96.60 per barrel in the international markets, he added.

In the international market, Comex gold futures for the June contract rose nearly 1 per cent to USD 4,590.62 per ounce in New York.

''Gold prices rose sharply as renewed optimism over a potential US-Iran peace agreement boosted sentiment across precious metals markets,'' Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd, said.

Bullion benefited from a sharp decline in the US dollar and Treasury bond yields, while easing concerns over prolonged energy-driven inflation also supported prices, he added.

According to analysts, US futures traded marginally higher on Monday with volumes remaining thin as American markets stayed closed for the Memorial Day holiday.

US President Donald Trump said on Sunday that the framework for a peace deal with Iran was ''largely negotiated,'' with reports indicating that the proposed agreement could extend the existing ceasefire and reopen shipping routes through the Strait of Hormuz, a critical artery for global oil flows.

However, Trump later clarified that there was ''no hurry'' to finalise the agreement and confirmed that the US naval blockade against Iran would remain in place for now.

Analysts noted that despite progress in negotiations, major differences remain over Tehran's nuclear programme, which Iranian officials have repeatedly rejected.

Hopes for de-escalation helped ease fears that surging oil prices could trigger another wave of global inflation and force central banks into further rate hikes, they added.

''Minutes from the Federal Reserve's April meeting scheduled last week showed policymakers remained open to further hikes if energy-driven inflation persists, while newly sworn-in Fed Chair Kevin Warsh is expected to maintain a cautious stance despite Trump's push for lower rates,'' Modi said.

Market participants will now closely watch the upcoming US GDP data and further developments in Middle East negotiations for fresh direction in bullion prices, he stated.