Gold traded near one-week highs during Asian trading on Thursday as optimism surrounding a potential peace agreement between the United States and Iran weakened the US dollar and supported demand for bullion.
By 3 pm AEST (5 am GMT), spot gold was up 0.1% at US$4,696.80 per ounce.
The precious metal continued to benefit from improving sentiment surrounding negotiations between Washington and Tehran after reports suggested both sides were nearing a possible agreement to end the conflict.
Investor optimism increased after Axios reported that the United States believes it is close to securing a 14-point memorandum of understanding with Iran aimed at ending the war.
According to the report, the proposed agreement includes provisions for the suspension of Iranian nuclear enrichment, the lifting of sanctions and the restoration of free transit through the Strait of Hormuz.
A reopening of the Strait of Hormuz and the normalisation of maritime shipping routes could ease pressure on global energy markets, potentially weighing on oil prices and reducing inflation concerns worldwide.
Lower inflation expectations may also influence the outlook for U.S. monetary policy, with markets increasingly considering the possibility that the Federal Reserve could resume easing measures in the coming months rather than maintain a prolonged pause.
Economic data released overnight also remained in focus for investors assessing the path of U.S. interest rates.
Figures from ADP showed U.S. private employment increased by 109,000 jobs in April, following a downwardly revised gain of 61,000 in March.
The result exceeded market expectations for an increase of 99,000 jobs and marked an acceleration of 61,000 from the previous month.
Attention is now turning to the upcoming U.S. nonfarm payrolls report, with markets expecting headline employment growth of around 60,000 jobs in April after a stronger-than-expected increase of 178,000 in March.
The unemployment rate is forecast to remain unchanged at 4.3%.
Gold prices have remained supported in recent sessions as investors balance easing geopolitical tensions with expectations for future Federal Reserve policy adjustments and the outlook for the US dollar.
