BENGALURU — Gold rose to a near three-week high on Wednesday as oil prices and the dollar fell sharply after the United States and Iran agreed to a two-week ceasefire as talks began on a permanent end to the war.
Spot gold was up 1.7% at US$4,783.78 per ounce, as of 1123 GMT. Earlier in the session, bullion rose more than 3% to its highest level since March 19.
US gold futures for June delivery gained 2.7% to $4,812.60.
The United States and Iran have agreed to a two-week ceasefire, subject to Iran's agreement to pause its blockade of oil and gas supplies through the Strait of Hormuz, Trump said.
This came even as an oil refinery on Iran's Lavan Island was targeted in an attack on Wednesday.
Oil prices fell more than 13% to below the $100 a barrel mark, while the dollar sank to its lowest level in a month on the news.
"The weaker dollar is supporting gold, but essentially it is also supported by lower oil prices, lower inflation and increased rate cut expectations after the ceasefire announcement," said UBS analyst Giovanni Staunovo.
Gold has fallen 10% since the US and Israel launched attacks on Feb 28. Though the metal is viewed as an inflation hedge, higher interest rates weigh on the non-yielding asset.
Investors now see a 43% chance of at least one rate cut by year-end compared to 14% a day prior, according to CME's FedWatch Tool. They are now awaiting the minutes of the US Federal Reserve's (Fed) March policy meeting later in the day.
Stocks and bonds surged, but beyond the immediate relief investors were keen to see whether the ceasefire leads to a broader resolution before placing major bets.
"We continue to retain a constructive outlook for gold targeting a price of $5,900/oz by the end of the year, driven by diversification demand as a result of rising debt levels and lower real interest rates," Staunovo said.
Spot silver jumped 5.6% to $77.02 per ounce, platinum gained 5.1% to $2,058.10 and palladium added 4.5% to $1,536.30.
Gold prices up in Thailand
Locally, gold prices rose 650 baht per baht-weight of gold on Wednesday.
As of 5.24pm, the buying and selling prices were 72,300 baht and 72,500 baht for bullion, and 70,857.84 and 73,300 baht for gold ornaments, according to the Gold Traders' Association.
