Investing.com– prices rose to a three-week high in Asian trading on Wednesday as the U.S. dollar weakened after President Donald Trump agreed to a two-week ceasefire with Iran, averting planned strikes on the country’s civilian infrastructure.
Spot gold climbed 2.5% to $4,821.48 per ounce by 20:38 ET (00:38 GMT), reaching its highest level since March 19.
U.S.Gold Futures also advanced 2.5% to $4,849.25/oz.
Among other precious metals, prices rose 4.7% to $76.44 per ounce, while gained 2.5% to $2,030.60/oz.
Trump to suspend military action against Iran for 2 weeks
Trump said in a social media post that he would suspend military action against Iran for two weeks, adding that the U.S. had already achieved its core military objectives.
The announcement came less than two hours before the 8:00 p.m. ET deadline, which investors had closely watched as a potential trigger for major escalation.
Earlier in the day, Trump had warned that “a whole civilization will die tonight” if Iran failed to comply.
The ceasefire, brokered by Pakistan after last-minute diplomatic efforts, is conditional on Iran ensuring the safe reopening of the Strait, a key artery for roughly 20% of global oil flows.
Iran also signaled a conditional willingness to de-escalate, saying safe passage through the Strait would be possible during the ceasefire period, provided hostilities were halted and vessels coordinated with Iranian authorities.
Oil price plunge, dollar slips
Markets reacted swiftly, with oil prices plunging by more than 15% and risk assets rallying, while the dollar came under pressure.
The fell nearly 1% in Asian trade on Wednesday, making bullion cheaper for holders of other currencies.
Despite bullion’s traditional appeal as a safe-haven asset, it had come under pressure last month as oil prices surged sharply, stoking inflation concerns and raising expectations that the U.S. Federal Reserve could keep interest rates higher for longer.
Market participants also looked ahead to the U.S. March report due on Friday, which is expected to provide the first clear indication of the impact of the recent surge in energy prices.
Economists expect headline inflation to have accelerated on a monthly basis, driven largely by higher fuel costs, potentially complicating the outlook for Federal Reserve policy.