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Gold prices rise as the dollar weakens and oil prices fall, easing inflation fears

Gold prices increased?on a?Tuesday?, aided by a softer Dollar and easing fears of inflation. Oil prices fell on the hope that further U.S. Iran peace talks would be held.

As of 0755 GMT, spot gold rose 0.8% to $4,775.20 an ounce. U.S. Gold futures for delivery in June rose by 0.7% to $4 798.40. Oil prices?fell under $100 a barrel after signs of possible talks to end U.S.-Iran War?eased fears about supply risks arising from the U.S. ban on Iranian ports.

Increased crude oil prices increase transportation and production costs, which in turn contribute to inflation. Gold is often used as a hedge to inflation but higher interest rates can reduce its demand.

Ilya Spirak, the head of global macro for Tastylive, stated that markets appear to believe?that it's not too late?to reach a deal with Iran. Reports on Tuesday indicated that the U.S., Iran and their respective negotiating teams could return to Islamabad in the coming week after the talks between these two countries failed to produce a breakthrough.

The U.S. dollar fell to its lowest level in more than a month on hopes for a diplomatic breakthrough, ?making the greenback-denominated gold more affordable for holders of other currencies.

Near-term, the U.S. - Iran headlines could be the driving force due to a "thin macro calendar". This sets up choppy prices for the moment," Spivak said, adding that resistance to gold's price could be around $4,850.

The current market expectation is that there will be a 25 basis-point rate cut in the United States this year. This was up from 13% last week. Before the war there was a belief that this year would see two rate cuts.

Silver spot rose by 2.9%, to 77.73 dollars per ounce. Platinum gained 0.8%, to $2,086.15, while palladium rose 0.7%, to $1,585.42. (Reporting and editing by Subhranshu sahu, Varun H. K. and Noel John from Bengaluru)

(source: Reuters)