Gold prices rose early on Thursday as the dollar and treasury yields weakened as oil prices dropped after Israel and Lebanon reached a ceasefire agreement, lowering the inflation fears that have kept the precious mental rangebound since the start of the war between the United States and Iran.
Gold for July delivery was last seen up US$59.10 to US$4,526.00 per ounce.
The rise comes as Israel and Lebanon agreed to a ceasefire, one of Iran's key demands for agreeing for a deal of its own to end the war with the United States and reopen the Strait of Hormuz. The rise in oil prices that has followed the start of the war has boosted inflation, raising worries central banks will need to hike interest rates, bearish for gold since it pays no interest. However oil traded sharply lower Thursday following the ceasefire agreement.
"Gold fell to test its 200-day moving average once again on Wednesday as higher oil prices kept inflation concerns elevated following renewed tensions in the Middle East. Those losses were reversed in early trading on Thursday after Israel and Lebanon announced a conditional ceasefire. Overall, gold remains rangebound, with steady central bank demand being offset by ETF outflows and short-term momentum traders positioning for a deeper correction," Saxo Bank noted.
The dollar fell off a two-month high as oil prices weakened, with the ICE dollar index last seen down 0.3 points to 99.23. Treasury yields also fell, with the U.S. two-year note last seen paying 4.043%, down 4.3 basis points, while the yield on the 10-year note was down 4.5 points to 4.455%.