ASIA (Reuters): Gold inched up at the weekend, reversing earlier losses of more than 1%, on hopes for a breakthrough to end the Iran war after Tehran submitted a new proposal for negotiations, easing some inflation concerns.
Spot gold was up 0.1% to $4,627.63 per ounce at 1:50 p.m. ET (1750 GMT) after falling to as low as $4,559.48 earlier in the session. It was still on track for a weekly loss of 1.7%.
U.S. gold futures for June delivery were up 0.4% to $4,649.60.
"Positive news regarding negotiations to end the war with Iran helped gold recover from early morning losses," said Chris Gaffney, president of world markets at EverBank.
"An end to the Iran war could lead the FOMC to begin cutting interest rates again which would decrease the value of the U.S. dollar, which would be a positive for gold prices," he added.
The dollar eased against its peers, making greenback-priced bullion cheaper for buyers holding other currencies.
Iran has submitted its latest proposal for negotiations with the United States, Iranian state media and a Pakistani official said.
Oil prices dropped on the news, though they remained on track for weekly gains, continuing to fuel concerns about a global economic slowdown and surging inflation as fuel prices climb.
Rising costs could prompt central banks to keep interest rates higher for longer, weighing on non-yielding assets such as gold as investors turn to alternatives like Treasury yields.
The U.S. Federal Reserve kept interest rates unchanged this week and struck a hawkish tone that saw markets abandon expectations for a rate cut this year.
Bullion prices have fallen since the start of the Iran conflict in late February, despite the metal's traditional role as a hedge against geopolitical uncertainty.
Among other precious metals, spot silver prices rose 3% to $75.91 per ounce.
"Long-term outlook (for silver) remains supported by a sixth consecutive annual market deficit, shrinking above-ground inventories and firm demand from solar and private investors," wrote Ole Hansen, head of commodity strategy at Saxo Bank.
Platinum was up 0.3% at $1,992.05, and palladium added 0.6% to $1,532.79. (Reporting by Anjana Anil in Bengaluru. Editing by Nia Williams and Mark Potter) -- Reuters
