Gold prices rose sharply on Monday, as hopes for a potential peace deal between the U.S. and Iran sent oil prices lower, but gains were limited by expectations that interest rates may remain higher for longer to counter energy-driven inflationary pressures.

By 05:32 ET (09:32 GMT), spot gold had jumped by 1.2% to $4,562.00 an ounce, while gold futures had risen by 0.9% to $4,596.51 an ounce.

Iran and the United States have reached a framework of a deal to end their more than two-month old conflict, but a potential memorandum of understanding does not include specifics about the management of the Strait of Hormuz, according to a news report citing an Iranian foreign ministry spokesperson.

An agreement between Tehran and Washington cannot be said to be imminent, although both sides have reached conclusions on a range of topics, the spokesperson said, according to Reuters.

The comments come after media reports over the weekend, quoting a senior White House official, suggested that a framework deal has been reached. The reports said an agreement would include the reopening of the Strait of Hormuz, a vital waterway off Iran’s southern coast through which roughly a fifth of the world’s oil flows. The strait has been all but shuttered to tanker traffic for weeks, driving up oil prices and fueling worries over a burst of inflation in countries around the world.

In exchange, the U.S. would reportedly lift a naval blockade of Iranian ports.

Notably, the Iranian foreign ministry spokesperson said that Tehran will not be taking tolls from vessels traversing the strait, potentially reversing a major threat that Tehran would move to solidify a financial stranglehold over the conduit. However, the spokesperson noted that any services which will be provided will "require a price but should not be presented as tolls."

Writing on social media, U.S. President Donald Trump flagged that he had told his representatives "not to rush into a deal," adding that the American blockade on Iranian ports would stay in effect until an agreement is "reached, certified, and signed."

Against this backdrop, Brent crude futures, the global oil benchmark, had last fallen by 5.0% at $95.23 a barrel, sliding below recent peaks above $100. Still, Brent is exchanging hands well above pre-war levels.

Bets have grown that an energy-induced inflationary spike will lead central banks to hike interest rates, a trend that may not bode well for non-yielding assets like gold.

At the same time, the U.S. dollar has been seen as a relative safe haven for investment, thanks in part to the belief in some corners that the U.S. -- a major energy exporter -- will be able to economically withstand an energy shock brought on by the war.

A firmer dollar can take some of shine off of gold’s appeal by making the yellow metal more expensive for overseas buyers. The dollar index, a tracker of the greenback against a basket of currency peers, weakened slightly on Monday.