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Update: Gold Rises as the Dollar and Yields Moderate as Iran Considers a Fresh U.S. Peace Offer

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(Updates prices.)

Gold edged higher midafternoon Thursday, moving up from early losses as the dollar and yields moderated despite an uncertain outlook for a peace deal between Iran and the United States.

Gold for June delivery was last seen up US$7.70 to US$4,543.00 per ounce after earlier touching US$4,488.30.

The drop comes after the United States on Wednesday sent Iran a fresh peace offer. Though Iran has not formally responded, reports said the country's Supreme Leader has refused to end the country's nuclear program, a key U.S. demand, boosting oil prices along with the dollar and yields as the market fears energy inflation will lead to higher interest rates. The price of the precious metal has remained rangebound since late March as the inflation concerns push up bond yields and the dollar, both bearish for gold.

"Bullion is currently showing unusually elevated inverse correlations with bond yields, the dollar and crude oil, highlighting the reaction function driving current price action," Saxo Bank noted.

The dollar rose early, with the ICE dollar index last seen up 0.08 points to 99.17, after earlier touching 99.52. Treasury yields also fell off session highs, with the U.S. two-year note last seen paying 4.062%, down 0.6 basis points, while the yield on the 10-year note was down 2.9 points to 4.563%.

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