Gold prices surged to their highest in more than five years on Thursday after the US Federal Reserve signalled a possible interest rate cut as early as next month, pressuring US Treasury yields and the dollar.

Spot gold was up 1.6 per cent at $1,380.96 per ounce as of 1213 GMT, after hitting its highest since March 17, 2014 at $1,386.38.

Gold prices have gained about $80 so far this month.

US gold futures jumped 3 per cent to $1,389.10 an ounce, after touching their highest since April 2018 at $1,397.70.

Silver gained 1.2 per cent to $15.34 per ounce, after hitting its highest since March 27 at $15.40.

Platinum rose 1.2 per cent to $820.26 per ounce, while palladium was 1 per cent higher at $1,515.02 per ounce, having hit a 12-week high of $1,531.38 earlier in the session.

Crude oil rose by more than 3 per cent to above $63 a barrel on Thursday after Iran shot down a US military drone, raising fears of a military confrontation between Tehran and Washington.

Oil rises

Brent crude, the global benchmark, was up $1.73 at $63.55 a barrel at 1218 GMT, having earlier gained 3.3 per cent to $63.88. US West Texas Intermediate crude rose $1.84 to $55.60.

Also propelling oil higher on Thursday was a decline in US crude inventories and the prospect of prolonged supply restraint by producer group OPEC and its allies.

US crude stocks fell by 3.1 million barrels last week, more than analysts expected, the Energy Information Administration said on Wednesday.

The Organization of the Petroleum Exporting Countries and allies including Russia agreed this week to meet on July 1-2, ending a month of wrangling about the timing.

The coalition known as OPEC+ looks set to extend a deal on cutting 1.2 million barrels per day of production. The deal expires at the end of June.

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