Gold prices moved sharply higher during Asian trading on Wednesday, helped by a softer U.S. dollar and falling oil prices after fresh signs of de-escalation in the Middle East eased immediate inflation fears.
Spot gold climbed 2.3% to $4,663.85 per ounce by 02:51 ET (06:51 GMT), while U.S. Gold Futures for June gained 1.7% to $4,647.31.
The precious metal had already risen close to 1% in the previous trading session.
Trump points to possible Iran agreement and pauses Hormuz mission
U.S. President Donald Trump said on Tuesday that Washington would temporarily suspend its operation aimed at restoring commercial shipping through the Strait of Hormuz and suggested that an agreement with Iran could be close.
The announcement marked a shift toward diplomacy after tensions escalated earlier this week, when Trump’s “Project Freedom” initiative to secure shipping routes through the strait prompted a military response from Iran and triggered a sharp rise in oil prices.
Gold, which is traditionally viewed as a safe-haven investment, had recently faced pressure as surging energy prices increased inflation concerns and strengthened expectations that interest rates may remain elevated for longer — conditions that typically weigh on non-yielding assets such as bullion.
Falling oil prices help ease inflation concerns
Crude prices extended their declines during Asian trading following Trump’s comments, helping reduce fears of prolonged supply disruptions in global energy markets.
The retreat in oil prices helped calm inflation expectations, providing support to gold even as geopolitical risk premiums moderated.
“A more durable truce would reduce energy-led inflation risks and lower the chance of further Federal Reserve tightening, which is supportive for non-yielding assets,” analysts at ING said in a note.
Precious and industrial metals rise as dollar weakens
The U.S. dollar also lost ground against major currencies amid growing optimism surrounding a potential agreement between Washington and Tehran, making gold less expensive for buyers using other currencies.
The U.S. Dollar Index traded 0.4% lower during Asian hours.
Among other precious metals, silver prices surged 4% to $75.73 per ounce, while platinum rose 2.2% to $2,000.40 per ounce.
In industrial metals, benchmark copper futures on the London Metal Exchange climbed 1.5% to $13,289.78 per ton, while U.S. copper futures advanced 1.7% to $6.09 per pound.