Gold Soars After U.S.-Iran Commit To Two-Week Ceasefire

(RTTNews) - Gold prices have surged on Wednesday after the announcement of a two-week truce between the U.S. and Iran intended to draw a framework for negotiations.

Front Month Comex Gold for June month delivery has soared by $97.1 (or 2.07%) to $4,781.80 per troy ounce.

Front Month Comex Silver for June month delivery has catapulted by $3.649 (or 5.05%) to $75.900 per troy ounce.

On February 28, U.S. and Israeli forces attacked Iran, which retaliated, kicking off a war.

Since the conflict began, Iran has effectively closed the Strait of Hormuz, thereby preventing crude oil and energy supply from Arab nations to various countries.

While oil prices skyrocketed over the past few weeks, inflationary pressures grew day by day in all major global economies.

After multiple attempts to negotiate with Iran to strike a peace deal fell through, U.S. President Donald Trump issued an ultimatum to Iran to open the strait before Tuesday 08:00 p.m. ET or face severe consequences.

The heated exchange of words between Trump and Iranian military leaders and high-level officials rattled the world markets.

Trump asserted that Iran could be wiped out if it continues to close the strait.

Undeterred, Iran expressed readiness to face any attack and retaliate strongly, both within the Arab region as well as outside the neighborhood.

A few hours before the deadline lapsed, Pakistani Prime Minister Shehbaz Sharif informed via X platform that indirect peace talks were progressing well.

Sharif asked Trump for a two-week extension of the deadline and halt any attacks on Iran. He also simultaneously requested Iran's leadership to open up the strait as a "goodwill gesture."

Later, Sharif announced that both the nations have agreed to a two-week ceasefire and also added that delegations from the U.S. and Iran would meet on Friday, April 10, in Islamabad, Pakistan to explore ways to settle all disputes.

While Iran officially confirmed that it will permit shipping transit through the Hormuz Strait in this interim two-week period, the U.S., on its part, agreed to halt all military strikes on Iran during this interval.

Hailing the ceasefire, Trump called it "a big day for World Peace" and added that the U.S. has received a 10-point proposal from Iran and stated that the tenets offer a workable premise for further negotiations.

Trump stressed that China helped Iran to agree to negotiations with support from Egypt and Turkey and confirmed that the U.S. will work closely with Iran.

Separately, Trump warned that any country supplying military weapons to Iran would be taxed 50% on their exports to the U.S.

While Israel approved the ceasefire deal, Prime Minister Benjamin Netanyahu stated that the proposal does not cover Israel's fight with the Lebanese Hezbollah militants.

Oil prices underwent a freefall after today's announcement. Aside from the declines during COVID period, today's nosedive is the biggest for oil since the 1991 gulf war.

Gasoline prices are expected to reverse gradually from their recent increases.

Meanwhile, the Mortgage Bankers Association of America revealed that the Purchase Index in the U.S. increased to 161.10 on April 3 from 159.40 in the previous week.

Contrary to the usual trend where gold prices fall when geopolitical tensions ease, the yellow metal climbed today as markets are probably sending divergent signals.

Since the two-week period is a limited timeframe and this pause is not a final settlement to the crisis, risks of renewed escalation after a fortnight still linger. Analysts are waiting to see if shipping companies are fully confident of their own safety.

The "pause" in the conflict boosted equities but the lingering doubts are forcing traders to embrace cautious optimism.

Crude oil was last seen trading at $94.68 a barrel, plummeting by $18.27 (or 16.18%).