ASIA (Reuters): Gold rose more than 1% at the weekend after reports that the US and Iran may have agreed to extend their ceasefire, though it was still headed for a monthly decline as inflation concerns and expectations of higher interest rates weighed on prices.
Spot gold was up 1.5% at $4,556.84 per ounce at 1:49 p.m. EDT (1749 GMT). Prices fell to a two-month low of $4,365.76 on Thursday, but closed higher.
U.S. gold futures for August delivery settled 1.3% higher at $4,593.
U.S. President Donald Trump said he would decide over a potential deal with Iran to extend their ceasefire that would need to include opening the Strait of Hormuz and dismantling Tehran's capacity to make a nuclear weapon.
Gold bounced from a key technical support level, while optimism over the ceasefire extension pushed oil prices and the dollar lower - both supportive for bullion, said Phillip Streible, chief market strategist at Blue Line Futures.
The dollar index was on track for a weekly decline, making dollar-denominated metals cheaper for overseas buyers, while oil prices were also set for a weekly fall.
Still, the "higher-for-longer" interest-rate theme remains intact, Streible said, as disruptions to shipping and energy infrastructure could keep oil prices elevated and the Federal Reserve cautious.
Data showed U.S. inflation rose at its fastest pace in three years in April, driven by higher energy prices linked to the Iran war, reinforcing expectations the Fed will keep rates unchanged well into next year.
Higher interest rates increase the opportunity cost of holding non-yielding gold. Spot gold was down more than 1% for the month.
Elsewhere, gold demand in India remained subdued due to higher prices and import duties, while premiums in top consumer China narrowed amid cautious sentiment.
Spot silver was flat at $75.62 per ounce and was headed for a monthly gain, while platinum lost 0.3% to $1,917.65. Palladium fell 1.1% to $1,352.24, and was down more than 11% for the month.
(Reporting by Ashitha Shivaprasad in Bengaluru and additional reporting by Anjana Anil. Editing by Mark Potter and Diti Pujara) -- Reuters
