Gold prices bounced back in futures trade on Monday, rising sharply by Rs 2,242 to Rs 1.52 lakh per 10 grams, tracking strong global trends after the announcement of a US-Iran peace deal which lifted the market sentiment.

On the Multi Commodity Exchange, the yellow metal for August delivery jumped Rs 2,242, or 1.49 per cent, to Rs 1,52,770 per 10 grams in a business turnover of 8,948 lots.

Last week, gold futures declined Rs 5,066, or 3.2 per cent, to settle around Rs 1.50 lakh per 10 grams.

Analysts said the recovery came after the precious metal witnessed a sharp correction last week, with traders reassessing their positions amid heightened geopolitical tensions and concerns over a prolonged higher interest rate environment.

"Gold prices surged in the domestic markets on Monday amid a weak dollar following the announcement of a peace deal between the US and Iran, which has boosted investor sentiment towards precious metals as safe-haven assets," Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.

In overseas trade, Comex gold futures for August contract rose USD 91.04, or 2.15 per cent, to USD 4,329.84 per ounce in New York. The yellow metal fell nearly 3 per cent, during the past week to close at USD 4,238.8 per ounce.

"Gold prices surged more than 2 per cent in global markets on Monday after US and Iranian officials announced an interim peace framework that would halt hostilities, lift Washington's blockade on Tehran, and reopen the Strait of Hormuz," Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, said.

In a post on Truth Social, US President Donald Trump said, "The deal with the Islamic Republic of Iran is now complete," adding that he had authorised the toll free opening of the Strait of Hormuz and the immediate removal of the US Naval blockade.

The prospect of increased oil supplies pushed crude prices lower, easing fears of energy-driven inflation that had dominated markets for months, Modi said.

Lower rate expectations, softer Treasury yields, and a weaker dollar supported bullion prices, he added.

However, analysts said traders are likely to remain cautious as several aspects of the proposed agreement, particularly those related with Iran's nuclear programme, are yet to be resolved.

Investors will focus on the monetary policy meetings of the Bank of Japan, the US Federal Reserve and the Bank of England, for global growth trajectory and the near-term direction for the precious metals.