Updates for EMEA morning session

By Pablo Sinha

May 6 (Reuters) - Gold prices climbed over 3% on Wednesday to hit their highest in over a week, as prospects of a U.S.-Iran peace deal dragged down the dollar and oil prices, alleviating inflationary pressures that had underpinned bets on higher-for-longer interest rates.

Spot gold XAU= jumped 3.2% to $4,703.09 per ounce, as of 0938 GMT, its highest since April 27. U.S. gold futures GCcv1 for June delivery rose 3.2% to $4,714.

Iran will only accept "a fair and comprehensive agreement" in its negotiations with the U.S. on ending the war, its foreign minister said on Wednesday, as U.S. President Donald Trump cited "great progress" in the process.

Trump said on Tuesday he would briefly pause an operation to help escort ships through the Strait of Hormuz.

"A timely peace deal allowing the normalisation of shipping through the Strait of Hormuz would alleviate inflationary pressures and create the conditions for the Federal Reserve to cut rates in 2026," said ActivTrades analyst Ricardo Evangelista.

"In a scenario of normalisation in the Persian Gulf, gold prices may regain some bullish momentum as the dollar weakens and yields soften. Such a scenario could allow the precious metal to revisit levels above $5,000 and approach $5,500 by year-end," Evangelista added.

Stocks leapt globally as oil prices fell on expectations that bottled-up supply from the key Middle East producing region could resume flowing. O/R MKTS/GLOB

Elevated oil prices can fan inflation and raise the prospect of higher interest rates, which tends to undermine gold's appeal as yield-bearing assets become more attractive.

The dollar fell, making greenback-priced bullion more affordable for holders of other currencies. USD/

Investors are now looking out for U.S. private payrolls data, due later in the day, and non-farm payrolls later this week, to assess the U.S. Fed's monetary policy path.

Spot silver XAG= rose 5.7% to $76.95 per ounce, platinum XPT= gained 3.4% to $2,020.05 and palladium XPD= was up 3.3% at $1,534.42.