BY COMFORT OGBONNA
Gold prices surged to their highest level in nearly three weeks on Wednesday as investors reassessed geopolitical risks after Donald Trump announced a temporary halt to U.S. military attacks against Iran, reducing immediate fears of further escalation in the Middle East and the potential for energy-driven inflation.
Spot gold climbed about 2.5% to $4,819.52 per ounce as of 0726 GMT. Earlier in the trading session, bullion had risen more than 3%, reaching its highest level since March 19 as investors rushed toward the precious metal following news of a two-week pause in hostilities.
The surge came after Trump said Washington had agreed to suspend bombings and military operations for two weeks while diplomatic efforts move forward. According to the U.S. president, Iran had submitted what he described as a “workable” 10-point proposal intended to form the basis for negotiations aimed at easing tensions between the two countries.
Trump’s comments marked a significant shift from earlier warnings in which he said Tehran would face severe retaliation if it did not reopen the strategic Strait of Hormuz, a critical shipping route through which a large share of the world’s oil supply passes.
Market analysts said the ceasefire announcement caught many investors by surprise, prompting a sharp reaction in financial markets.
Nicholas Frappell, global head of institutional markets at ABC Refinery, said traders had entered the session expecting the conflict to escalate further.
According to Frappell, the sudden announcement of a temporary truce significantly changed those expectations and provided strong support for gold prices, as investors repositioned their portfolios amid the shifting geopolitical outlook.
At the same time, Iranian officials indicated that diplomatic talks could soon begin. Iran’s Supreme Security Council said negotiations with the United States are expected to start on April 10 in Islamabad after Tehran delivered its proposal through diplomatic channels in Pakistan. However, officials also stressed that the negotiations should not be interpreted as an immediate end to the conflict.
Despite the temporary easing of tensions, financial markets remain cautious as investors continue to weigh the broader economic implications of the crisis. Rising energy prices during the conflict have raised concerns about global inflation, which could complicate interest-rate decisions by major central banks.
Gold is traditionally viewed as a safe-haven asset during periods of uncertainty and is often used by investors as protection against inflation and geopolitical instability. However, the metal does not generate interest or dividends, meaning its attractiveness can decline when interest rates remain high, since investors may prefer yield-producing assets.
Market participants are now closely watching upcoming economic signals, including the release of minutes from the latest policy meeting of the Federal Reserve. The minutes are expected to provide further insight into how policymakers view inflation risks and the future direction of interest rates.
Although gold began the year with strong gains, the precious metal has experienced significant volatility since the Iran conflict erupted on February 28. Prices have fallen more than 8% during that period as investors reacted to shifting geopolitical developments and changing expectations for global monetary policy.
Some analysts believe the current rally could prove temporary if the geopolitical situation stabilizes further. Independent metals trader Tai Wong described the recent jump in prices as a short-term relief rally driven by the ceasefire announcement.
According to Wong, key technical levels will play an important role in determining gold’s next move. He noted that the metal’s 200-day moving average near $4,930 per ounce represents a significant resistance level, followed by the psychologically important $5,000 mark.
Other precious metals also posted strong gains during the session as investor sentiment improved across commodity markets. Spot silver surged about 5.8% to $77.16 per ounce, while platinum rose 4% to $2,036.30. Palladium also advanced sharply, gaining about 4.6% to reach $1,537.75 per ounce.
The sharp movements across precious metal markets reflect how closely investors are monitoring geopolitical developments in the Middle East. As negotiations between Washington and Tehran move forward, market participants are likely to remain highly sensitive to any signals that could indicate whether the ceasefire will lead to a longer-term resolution or renewed conflict.