Spot gold was up 2.5% at $4,784.22 per ounce, highest since March19. U.S. gold futures settled 2.9% higher at $4,813.10.
The U.S. dollar dropped for a second consecutive day, making greenback-priced bullion more attractive for holders of other currencies.
“Gold prices could move back above $5,000 per ounce if we’re on a path toward de-escalation, as rate-cut expectations could creep back in,” said Bob Haberkorn, senior market strategist at RJO Futures.
“The focus is on Iran and the Strait (of Hormuz) - how this conflict unfolds, and what the path forward looks like,” he added.
U.S. President Donald Trump said in a Truth Social post that Iran’s president asked for a ceasefire, but Iran’s foreign ministry spokesperson called that assertion false and baseless. Trump is scheduled to address the nation at 0100 GMT on Thursday. Axios earlier reported that discussions about a ceasefire are taking place.
“An end to the conflict could prove a double-edged sword (for gold). On one hand, a lasting peace agreement would remove the geopolitical safe-haven bid that supported prices in the run-up to the conflict,” IG market analyst Tony Sycamore said.
On the other hand, lower oil prices and easing inflation could revive expectations of 2026 Fed cuts, which could help prices, Sycamore added.
Spot gold fell more than 11% in March as higher energy prices from the Iran war stoked inflation worries and led markets to scale back expectations of rate cuts.
Bullion is typically seen as a safeguard during geopolitical turmoil and inflation, but high interest rates reduce the appeal of the non-yielding metal.
U.S. private payrolls increased steadily in March, the ADP’s national employment report showed. U.S. retail sales rose solidly in February, but surging gasoline prices could crimp spending in the months ahead.