• Gold prices rose significantly after a U.S.-Iran ceasefire agreement.
• Spot gold hit a near three-week high, bolstered by a weaker dollar.
• Concerns remain over the sustainability of the ceasefire and inflation rates.

Gold prices experienced a notable increase following the announcement of a two-week ceasefire between the U.S. and Iran. The ceasefire has provided a sense of relief in the market, with spot gold climbing as much as 2.3% to US$4,811.66 per ounce by the end of the trading session, while U.S. gold futures for June delivery gained 3.3% to US$4,840.20. This surge reflects market reassessment of risks amid geopolitical tensions, according to Channel News Asia and Bangkok Post.

The ceasefire agreement aims to facilitate negotiations for a more permanent resolution and has led to falling oil prices, consequently impacting inflation expectations. UBS analyst Giovanni Staunovo remarked that the weaker dollar and lower oil prices are supporting gold, in addition to increasing anticipations of potential interest rate cuts from the U.S. Federal Reserve later this year, following a similar surge in gold prices. Investing strategies are being reconsidered as gold's role as an inflation hedge comes into focus, according to Bangkok Post and Reuters.

Despite the positive movement in gold prices, there is still significant caution in the market regarding the durability of the U.S.-Iran ceasefire. Recent military actions in the region continue to raise concerns, leading to speculation about the future trajectory of gold prices. Brian Lan, Managing Director at GoldSilver Central, noted that gold appears to be consolidating between $4,607 and $4,860 as traders await further developments, emphasizing the instability of the current situation given ongoing geopolitical risks and inflation data releases later this week. The impending inflation reports will play a crucial role in shaping expectations for the Fed's policy decisions, according to Reuters.