Spot gold jumped 2.5% to $4,323.29 per ounce, hitting its highest level since ​June 9 and extending gains for a third straight session

Gold rose more than 2% on Monday after Iranian and U.S. officials ‌said they had reached an initial agreement to end their war, pushing oil prices lower and easing concerns about inflation and higher interest rates.

Spot gold jumped 2.5% to $4,323.29 per ounce by 0536 GMT, hitting its highest level since ​June 9 and extending gains for a third straight session.

Iranian and U.S. officials said on Sunday they had agreed on ⁠a framework to end their war, halt the Iranian blockade and reopen the Strait ​of Hormuz.

Lower oil prices and a softer dollar, stemming from reduced geopolitical risk and ​the anticipated reopening of the Strait of Hormuz, are helping to calm inflation expectations, said Tim ​Waterer, chief market analyst at KCM Trade.

This combination is providing the precious metal with its best tailwind in recent ‌weeks, though ⁠sustainability will depend on how durable the peace agreement proves to be, he said.

Gold prices have dropped around 20% since the start of the U.S.-Israeli war against Iran in late February. The closure of the Strait of Hormuz by Iran has led to a sharp rise in international oil prices, stoking inflation concerns ​and raising expectations of interest ​rates staying higher ⁠for longer.

Bullion loses appeal in a high-interest-rate environment as it is a non-yielding asset.

Markets have scaled back expectations for a U.S. rate hike in December ​to 48% after the peace deal, down from 69% last week, according to ​the CME ⁠FedWatch tool.

Currency debasement concerns, fiscal risks and ongoing geopolitical fragmentation continue ⁠to underpin ​long-term demand for gold. A moderation in energy-led inflation could help ​these themes regain traction, OCBC said in a note.