PRECIOUS-Gold jumps over 2% as falling oil prices ease inflation concerns
By Ishaan Arora
March 25 (Reuters) - Gold prices climbed more than 2% on Wednesday, as falling oil prices eased some inflation concerns and dampened interest-rate hike bets, even as investors weighed conflicting developments in the U.S.-Israeli war on Iran.
Spot gold XAU= rose 2.4% to $4,582.18 per ounce, as of 1141 GMT. The metal had hit a four-month low of $4,097.99 on Monday. U.S. gold futures GCcv1 for April delivery jumped 4.1% to $4,581.60.
"With crude oil having eased on ceasefire hopes, this has allowed the U.S. dollar to ease back, providing mild support for gold, indices and bitcoin," said Fawad Razaqzada, market analyst at City Index and FOREX.com.
"But the situation remains far from resolved... Iran appears less willing to negotiate, looking to use high energy prices as leverage. Until there are concrete steps towards a ceasefire and an end to the conflict, I would take any short-term moves against the recent trend with a pinch of salt."
Oil prices slid over 5% on Wednesday on reports of a U.S. ceasefire plan, while the dollar also weakened. O/RUSD/
Iran's military, however, rejected President Donald Trump's assertion the U.S. was in negotiations to end the war which has roiled energy and financial markets, saying the U.S. is negotiating with itself.
Higher crude prices have stoked concerns of rising inflation and expectations of higher interest rates. Although rising inflation typically boosts gold's appeal as a hedge, high interest rates dampen demand for non-yielding bullion.
"Money market futures are up, which implies the market is expecting that there isn't a hike of central bank interest rates," said Quantitative Commodity Research analyst Peter Fertig.
The Fed may need to keep interest rates steady "for some time" before further cuts are warranted, Governor Michael Barr said on Tuesday.
Spot silver XAG= added 2.8% to $73.20 per ounce. Spot platinum XPT= gained 1.8% to $1,970.20 and palladium XPD= was up 1.6% at $1,462.22.
