Gold prices rose to a near three-week high on Wednesday as markets recalibrated their assessment of near-term risks following U.S. President Donald Trump’s decision to suspend bombing and attacks on Iran for two weeks, thereby alleviating concerns regarding energy-driven inflation. Spot gold increased by 2.3% to $4,812.49 per ounce, as of 0215. Earlier in the session, bullion increased by over 3%, reaching its highest level since March 19. U.S. gold futures for June delivery experienced an increase of 3.4%, reaching a value of $4,841.60. Trump indicated that Washington had consented to a two-week cessation of hostilities and had obtained a 10-point proposal from Iran, which he characterized as a viable foundation for negotiations. His comments came after previous warnings that Tehran must reopen the Strait of Hormuz or face potential U.S. retaliation.

This appears to be a reactionary relief rally, and it is yet to be determined whether Iran will adhere to the expectations. For gold, the 200-day moving average at $4,930 and subsequently $5,000 will represent significant obstacles. Similarly, $80-$81 is an important level for silver,” independent metals trader Tai Wong stated. Pakistan, acting as a mediator between Washington and Tehran, has sought a two-week extension to allow for the continuation of diplomatic efforts. Iran’s Supreme Security Council announced that negotiations with the United States are set to commence on April 10 in Islamabad, following the submission of its proposal through Pakistan.

However, it emphasized that these discussions do not indicate a cessation of hostilities. Increasing energy costs may exacerbate inflationary pressures and complicate the decision-making process for central banks regarding interest rates. Gold is frequently regarded as a hedge against inflation and a refuge in times of uncertainty; however, its attractiveness diminishes in a high-interest-rate context due to the absence of yield. Research conducted by the Federal Reserve Bank of Dallas indicates that a sustained interruption in global oil trade may elevate U.S. inflation beyond 4% by the end of the year, with more significant increases likely in the near term.

Gold, having commenced the year robustly, has experienced a decline exceeding 8% following the onset of the Iran war on February 28. Market participants are currently anticipating the release of minutes from the Federal Reserve’s March meeting, scheduled for later today. Among other metals, spot silver increased by 4.9% to $76.48 per ounce, platinum experienced a rise of 3.2% to $2,020.57, and palladium saw an uptick of 4.1% at $1,529.35.