Gold rises on softer oil prices; US jobs data, Fed rate outlook on tap

Market participants are now awaiting a series of U.S. jobs reports this week, including the ADP employment report on Wednesday and the nonfarm payrolls data on Friday.

Among other metals, spot silver XAG= gained 2.8% to $59.82 per ounce, platinum XPT= climbed 7.1% to $1,742.63, and palladium XPD= rose 7.1% to $1,354.27.

"The Platinum Group Metals are getting the full effect of a probable de-escalation in Iran with, being industrial metals, their fortunes being tied to a possible recovery in conventional off take," independent analyst Ross Norman said.

Oil prices fell more than 5% to a three-week low after comments by Qatari and U.S. officials raised hopes for a diplomatic resolution to the Iran war that could improve oil flows through the Strait of Hormuz.

"Lower oil is probably one of the drivers supporting gold prices," said Bart Melek, global head of commodity strategy at TD Securities, adding that the decline in many ways has contributed to the interest-rate outlook with short-term rates falling a little bit.

Elevated energy prices reinforce expectations that the Fed will keep interest rates higher for longer to combat inflation, weighing on non-yielding bullion.

Earlier on Monday, Fed's New York President John Williams said he remained optimistic that inflation pressures were on track to ease gradually, but if they do not, the U.S. central bank will not hesitate to respond with rate hikes.

Traders are now pricing in about a 57% chance of a rate hike in the central bank's September meeting after a divided Fed kept rates unchanged at its last policy meeting.

Gold prices gained 1% on Tuesday, supported by a decline in oil prices that tempered inflation fears and lowered the bets for U.S. interest rate hike, while markets awaited further clues on the Federal Reserve's policy path.