Gold prices pulled back from a three-week high on Wednesday but were still in the green after President Donald Trump agreed to a temporary ceasefire with Iran.
Spot gold added 0.3% to settle at $4,719.35/oz, after hitting a session high at $4,856.00/oz. U.S. gold futures for June delivery rose by 1.3% to settle at $4,745.15/oz.
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More dialogue scheduled in Pakistan, Iran says ceasefire violated Trump in a social media post on Tuesday said that he would suspend military action against Iran for two weeks, adding that the U.S. had already achieved its core military objectives. The move came just hours ahead of a 20:00 ET deadline Trump had imposed upon Tehran to reopen the critical Strait of Hormuz or see all of Iranian "civilization" eradicated.
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.
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.
The White House said a U.S. negotiating team led by U.S. Vice President JD Vance, Special Envoy to the Middle East Steve Witkoff, and American businessman Jared Kushner will travel to Islamabad in Pakistan this weekend for further diplomatic talks.
Iran later accused Israel of violating the ceasefire by carrying out strikes against Hezbollah in Lebanon. The speaker of Iran’s parliament said three key clauses in its 10 point proposal had been violated even before negotiations had started: non-compliance with ceasefire in Lebanon, the entry of an "intruding drone" into Iranian airspace, and the denial of Tehran’s right to uranium enrichment.
Vance told reporters that the "Iranians thought that the ceasefire included Lebanon and it just didn’t."
Oil prices plunge, dollar slips Markets reacted swiftly to the ceasefire news, with oil prices plunging by more than 12% and risk assets rallying, while the dollar came under pressure.
The U.S. dollar index, which tracks the greenback against a basket of currency pairs, fell, 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. Gold tends to underperform in elevated rate environments.
Market participants were also looking ahead to the U.S. March consumer price index (CPI) report due on Friday, which is expected to provide one of the first clear indications of the impact of the recent surge in energy prices due to the war.
Economists expect headline inflation to have accelerated on a monthly basis, driven largely by higher fuel costs, potentially complicating the outlook for Fed policy.
