Gold prices surged on Wednesday, climbing back toward two-week highs as growing optimism surrounding a potential U.S.-Iran peace agreement eased fears of prolonged inflation and persistently high interest rates.
Spot gold rallied as much as 3.6% during trading, pushing back above the $4,700 an ounce level for the first time in weeks. Three-month futures in New York traded near $4,710 an ounce, while silver outperformed again, surging more than 6% toward $78 an ounce.
The rally followed reports that Iran is reviewing a U.S. proposal aimed at ending the conflict in the Gulf region, a war that has disrupted energy markets and fuelled inflation concerns globally.
Throughout the ten-week conflict, soaring oil prices had increased fears that central banks, particularly the Federal Reserve, would be forced to keep interest rates higher for longer. That environment had weighed heavily on bullion, with gold falling roughly 11% from recent highs despite its traditional safe-haven status.
As signs of a possible resolution emerged, markets quickly shifted focus back toward the prospect of future rate cuts and easing inflation pressures — a combination that strongly supports precious metals.
Analysts at BMO Capital Markets said renewed optimism around a peace agreement helped trigger broad buying across the metals sector.
“Gold prices rallied above $4,700 per ounce on renewed hopes of a U.S.-Iran peace deal, with silver and platinum group metals outperforming as risk appetite returned,” commodities analysts Helen Amos and George Heppel said in a note.
Despite the rebound, they cautioned that Middle East developments remain the dominant force driving short-term volatility.
The latest move also comes after heavy selling pressure in gold-related investment products last week. The VanEck Gold Miners ETF fell 7.7%, significantly underperforming spot gold, while gold ETFs recorded a second consecutive week of outflows totalling approximately $735 million. The largest selling came from North American and Chinese investors.
Oil prices also eased during Wednesday’s session, briefly falling below US$100 per barrel, although uncertainty remains over shipping access through the Strait of Hormuz following the suspension of U.S. naval escort plans.
U.S. President Donald Trump added further speculation after posting that the military campaign would end “assuming Iran agrees to give what has been agreed to.”
Markets are now turning their attention to upcoming U.S. economic data, particularly Friday’s employment report, which could shape expectations for Federal Reserve policy over the coming months.
Despite short-term volatility, major banks and institutional investors continue to maintain a bullish long-term outlook for gold. One of the strongest underlying drivers remains central bank demand, with the World Gold Council reporting continued official-sector gold buying during the last quarter, even as some nations modestly reduced holdings.
For many investors, the combination of geopolitical instability, rising government debt, central bank accumulation, and fragile global growth continues to reinforce gold’s role as a long-term store of wealth.
