Gold prices rose on Tuesday, supported by a weaker US dollar and easing energy costs after US President Donald Trump suggested that the war in the Middle East could end soon.

Respite from a potential war-driven surge in inflation would likely reduce the chances of central banks raising interest rates, a positive for non-yielding gold.

Spot gold rose 0.5 per cent to $5,161.54 per ounce, as of 04:29 GMT. US gold futures for April delivery rose 1.3pc to $5,171.10.

The dollar fell 0.3pc, making greenback-priced bullion cheaper for holders of other currencies.

Gold prices rose “due to the news flow from US President Trump himself, stating that there is a potential for de-escalation… So what we could see is that potential inflation expectation starts to tone down given this dramatic fall in oil price,” said Kelvin Wong, a senior market analyst at OANDA.

Oil prices fell by more than 10pc following Trump’s comments.

But, he also warned that US attacks could rise sharply if Iran sought to block tanker traffic through the Strait of Hormuz, which handles one-fifth of the world’s oil supply.

The war has effectively shut the strait, stranding tankers for over a week and forcing producers to halt output as storage fills up, sending energy prices soaring.

Gold prices fell by as much as 2pc on Monday as higher energy costs fanned inflation concerns and further dimmed the prospects for a near-term cut in interest rates by the US Federal Reserve.

Investors expect the Fed to keep rates steady at the end of its two-day meeting on March 18, per CME Group’s FedWatch tool.

Gold is seen as an inflation hedge, but low rates reduce the opportunity cost of holding it as a zero-yield asset.

Markets are now awaiting the US consumer price index for February, due on Wednesday, and Personal Consumption Expenditures index - the Fed’s preferred inflation gauge - on Friday.

Spot silver rose 1.4pc to $88.25 per ounce. Spot platinum fell 0.2pc at $2,177.02 and palladium lost 0.9pc to $1,675.58.