June 4 (Reuters) - Gold prices rose on Thursday as hopes of a resolution to the Middle East conflict pushed the dollar and oil prices lower, easing fears of higher inflation and interest rate hikes.
Spot gold was up 1.7% at $4,506.19 per ounce, as of 1156 GMT. U.S. gold futures for August delivery gained 1.5% to $4,533.60.
The dollar eased, making greenback-priced bullion more affordable for holders of other currencies.
Israel and Lebanon agreed to implement a ceasefire to end hostilities, the Trump administration said on Wednesday, boosting hopes for a broader deal to end the U.S.-Israeli war on Iran.
Additionally, the Republican-led U.S. House of Representatives approved a resolution to block U.S. President Donald Trump from continuing the war against Iran.
"A successful diplomatic outcome would allow crude flows to resume and ease inflationary fears. Cooling geopolitical concerns and lower oil prices weighing on the greenback could help bullion extend its recovery," said Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com.
Oil fell after the Israel-Lebanon ceasefire announcement. Gold prices have fallen about 16% since the Iran conflict began in late February as oil prices rose. Elevated crude oil prices can stoke inflation, increasing the likelihood of higher interest rates.
While gold is seen as a hedge against inflation, higher rates tend to weigh on the non-yielding metal.
Meanwhile, consultancy Metals Focus expects gold to resume its bull run in the second half of 2026, but sees total gold demand falling 2% in 2026 due to double-digit losses in jewellery and central bank purchases.
"The near-term outlook (for gold) remains challenging, and the precious metal could slip deeper into bear territory over the coming days. This combination of lingering geopolitical risk and higher-for-longer interest rates benefits the U.S. dollar, maintaining strong headwinds for gold," Tzabouras said.
Investors now await the U.S. nonfarm payrolls data for May due on Friday to gauge the Federal Reserve's monetary policy path.
Spot silver rose 2.4% to $74.44 per ounce, platinum gained 2.1% to $1,897.60, and palladium added 1.8% to $1,325.14.
Reporting by Noel John in Bengaluru; Editing by Emelia Sithole-Matarise and Shailesh Kuber
