Gold prices moved to their highest level in three weeks on Wednesday as the U.S. dollar weakened following President Donald Trump’s announcement of a two-week ceasefire with Iran, cancelling previously planned strikes on Iranian civilian infrastructure.
Spot gold climbed 2.7% to $4,832.51 per ounce by 02:36 ET (06:36 GMT), marking its strongest level since March 19.
U.S. Gold futures also rose 2.7% to $4,857.25 per ounce.
Other precious metals posted solid gains as well. Silver jumped 6% to $77.38 per ounce, while platinum advanced 4.2% to $2,044.60 per ounce.
Trump pauses military action against Iran for two weeks
Trump said in a social media message that the United States would halt military operations against Iran for a two-week period, adding that Washington had already met its primary military goals.
The announcement arrived less than two hours before the 8:00 p.m. ET deadline that investors had been closely monitoring as a possible trigger for a broader escalation.
Earlier in the day, Trump had warned that “a whole civilization will die tonight” if Iran did not comply with U.S. demands.
The ceasefire, which was arranged through last-minute diplomatic efforts led by Pakistan, is contingent on Iran guaranteeing the safe reopening of the Strait of Hormuz, a strategic shipping route that carries roughly 20% of the world’s oil supply.
Iran also signaled it would be willing to reduce tensions during the ceasefire window, stating that safe passage through the Strait could be maintained provided hostilities stop and vessels coordinate their movement with Iranian authorities.
Trump also said on Wednesday that the United States would help address the traffic congestion building up in the Strait.
Oil drops sharply, dollar weakens
Financial markets reacted quickly to the news. Oil prices tumbled by more than 15%, risk-sensitive assets rallied, and the U.S. dollar came under pressure.
The U.S. Dollar Index declined nearly 1% during Asian trading hours on Wednesday, making gold more affordable for investors using other currencies.
Although gold is traditionally seen as a safe-haven asset, it faced pressure last month as oil prices surged sharply. The spike in energy costs fueled concerns about inflation and increased expectations that the U.S. Federal Reserve might keep interest rates elevated for a longer period.
Investors are now focusing on the U.S. March consumer price index (CPI) data due on Friday, which is expected to provide early insight into how the recent surge in energy prices has affected inflation.
Economists anticipate that headline inflation accelerated on a monthly basis, largely due to higher fuel prices, which could complicate the outlook for future Federal Reserve policy decisions.
In industrial metals, benchmark copper futures on the London Metal Exchange gained 2.8% to $12,691.33 per ton, while U.S. copper futures rose 2.7% to $5.74 per pound.