Gold prices rallied for a second consecutive session during Wednesday's Asian trade, supported by a weaker United States dollar and easing inflation concerns following a ceasefire agreement between Washington and Tehran.
Spot gold prices climbed 2.4% to US$4,820.95 per ounce by 3:35 pm AEST (5:35 am GMT), extending its rebound from the $4,600 level and reaching a near three-week high.
The gains came as the U.S. dollar weakened sharply, with the U.S. dollar index (DXY) sliding to a near one-month low in the wake of the ceasefire announcement.
Donald Trump said he would suspend planned military strikes against Iran for two weeks, contingent on Tehran agreeing to the full reopening of the Strait of Hormuz.
Iran confirmed it had accepted the temporary ceasefire, with negotiations set to begin in Islamabad, Pakistan, boosting investor confidence and weighing on the dollar’s appeal as the world’s primary reserve currency.
Abbas Araghchi added that safe passage through the Strait of Hormuz would be ensured for the two-week period, a development that triggered a sharp decline in oil prices.
The drop in crude prices helped ease inflation concerns, reducing expectations that the Federal Reserve will need to raise interest rates further.
Lower inflation expectations also pushed U.S. Treasury yields down, further pressuring the greenback and providing additional support for non-yielding assets such as gold.
