Gold rises 2.3%, extends gains after Trump announces Iran ceasefire

Gold prices increased by 2.3% on Wednesday as investors reevaluated short-term risks. This came after U.S. President Donald Trump announced a two-week halt to bombing and attacks on Iran, which helped to reduce concerns about rising energy costs leading to inflation. By 2344 GMT, spot gold was priced at $4,811.66 per ounce, following a 1.2% rise on Tuesday. Meanwhile, U.S. gold futures for June delivery went up by 3.3% to $4,840.20. Trump mentioned that the U.S. had agreed to pause its attacks and had received a 10-point proposal from Iran, which he called a good starting point for talks. His statement followed prior warnings that Iran needed to reopen the Strait of Hormuz or face U.S. consequences. Independent metals trader Tai Wong commented, “This is a quick relief rally, but it’s uncertain if Iran will follow through. For gold, the key levels to watch are the 200-day moving average at $4,930 and the $5,000 mark. Similarly, $80-$81 is crucial for silver.” Pakistan, acting as a mediator between the U.S. and Iran, requested this two-week pause to allow for diplomatic talks. Iran’s Supreme Security Council announced that discussions with the U.S. would start on Friday, April 10, in Islamabad, after sending its proposal through Pakistan. However, they noted that these talks do not indicate an end to the conflict. Rising energy prices could lead to inflation, complicating central banks’ decisions regarding interest rate cuts. Gold is often viewed as a way to protect against inflation and is a safe investment during uncertain times. However, its attractiveness decreases in a high-interest-rate environment since it does not provide any yield. Research from the Federal Reserve Bank of Dallas indicates that a long-term disruption in global oil trade could push U.S. inflation above 4% by the end of the year, with sharper increases possible in the short term. Although gold had a strong start to the year, it has dropped more than 8% since the Iran conflict began on February 28. Investors are now looking forward to the minutes from the Fed’s March meeting, which will be released on Wednesday. Other metals also saw gains, with spot silver rising 4.3% to $76.08 per ounce, platinum increasing by 2.4% to $2,004.95, and palladium climbing 2.1% to $1,500.