On Wednesday, gold prices rose more than 2% intraday after U.S. President Donald Trump suggested that a peace agreement with Iran may be within reach. The comments helped ease market fears surrounding inflation.

Trump stated on Tuesday that, given the progress made toward a comprehensive agreement between the U.S. and Iran, he would temporarily suspend naval escort operations aimed at securing shipping routes through the Strait of Hormuz. U.S. Secretary of State Marco Rubio confirmed the same day that Operation Epic Fury had ended, adding that Washington hoped to avoid any further escalation.

Earlier, the U.S. Defense Secretary also noted that the ceasefire agreement initiated about a month ago remains in place. Meanwhile, Iranian Foreign Minister Araghchi signaled that negotiations are making progress.

The reduction in geopolitical risk premiums helped push oil prices lower, which itself is supportive for gold. Previously, the U.S. had confirmed that despite some small-scale clashes earlier in the week, the fragile ceasefire agreement with Iran remained effective.

However, if there are any signs of renewed escalation between the two countries, gold could see profit-taking pressure, with short-term speculators potentially unwinding recent net long positions.

A weaker U.S. dollar has also played an important role in the rebound of precious metals. Dollar depreciation lowers the cost of dollar-denominated metals for holders of other currencies, thereby supporting demand.

At the same time, the relationship between oil prices and inflation expectations continues to reshape market dynamics. High oil prices typically fuel inflation and increase the likelihood of central bank rate hikes. Although gold is traditionally viewed as an inflation hedge, rising interest rates tend to increase the attractiveness of yield-bearing assets, reducing gold’s relative appeal.

Trump’s conciliatory comments effectively interrupted this chain reaction.

Market attention is now turning toward key economic data later this week. Investors are awaiting the U.S. nonfarm payrolls report to assess whether the U.S. economy remains strong enough for the Federal Reserve to maintain its current interest-rate stance.

Market Interpretation

On the four-hour chart, gold is showing a rebound within a range-bound pattern, while MACD lines and volume bars above the zero axis are beginning to contract.

Risks related to economic growth, deteriorating geopolitical relations, currency volatility, and downside risks in equity markets are expected to continue supporting gold’s role as a portfolio diversification tool.

However, for gold to break to new highs in the short term, broader institutional capital inflows may be required to offset the seasonal weakness and softer retail demand currently limiting momentum.