Gold rallied to the highest level in almost three weeks early Wednesday after the U.S., Israel and Iran agreed to a tentative two-week ceasefire in the war to give diplomacy a chance to end the conflict.
The dollar and oil prices tumbled on statements that the détente would at least temporarily reopen the Strait of Hormuz, a shipping route vital to the oil and gas industry. The declines in the other assets made gold a more attractive investment. The yellow metal has dropped from record highs since the war began. A weaker dollar is typically bullish for the yellow metal, making it a cheaper investment for holders of other currencies.
Markets were volatile, however, as details of how the ceasefire would play out remained vague. U.S. President Donald Trump said the U.S. had received a 10-point proposal from Iran. The ceasefire was requested by Pakistan, which has been a mediator in the conflict.
Investors are awaiting the release on Wednesday of the minutes of last month’s Federal Reserve policy meeting for signals on the central bank’s thinking on inflation after the war started.
June gold futures were unchanged Tuesday at $4,684.70 an ounce on Comex, and the most-active contract gained 0.1% in the first two days of the week. Bullion slid 11% in March after climbing 11% in February and rising 9.3% in January. It rallied 64% last year. The June contract is currently up $117.10 (+2.50%) an ounce to $4801.80 and the spot price is $4780.30.
The Iran conflict has erased expectations that the Fed would cut interest rates this year. The Fed’s favorite inflation measure, the personal consumption expenditures price index, is due out Thursday with February data, and the consumer price index, another inflation measure, is due out Friday with March data. Both will provide insight on what the conflict has done to the economy.
Most investors tracked by the CME FedWatch Tool expect the Federal Reserve to keep U.S. interest rates unchanged this year. Almost all the investors tracked by the tool are betting on rates staying unchanged at the next policy meeting in April.
Fed policymakers last month kept interest rates unchanged again at 3.50% to 3.75%. The Fed has kept interest rates unchanged this year after three previous rate cuts. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts in 2024.
Front-month silver futures dropped 1.2% Tuesday to settle at $71.99 an ounce on Comex, and the May contract fell 1.3% in the first two days of the week. The most-active contract touched a record above $115 in January. Silver dropped 20% last month after gaining 19% in February and advancing 11% in January. It rose 141% last year. The May contract is currently up $4.688 (+6.51%) an ounce to $76.675 and the spot price is $76.76.
Spot palladium decreased 2.2% Tuesday to $1,464.00 an ounce and is down 3.4% this week. Palladium tumbled 17% in March after gaining 8.8% in February and advancing 2.4% in January. Palladium rose 74% last year. The spot price is currently up $162.40 an ounce to $1619.00.
Spot platinum fell 1.9% Tuesday to $1,951.00 an ounce and has retreated 2.2% this week. It declined 17% in March after advancing 15% in February and gaining 1.4% in January. Platinum increased 122% in 2025. The current spot price is up $140.20 to $2083.90.
