Gold climbed to almost a three-week high on Wednesday, while the U.S. dollar weakened, after President Donald Trump agreed to a temporary ceasefire with Iran.

Spot gold was up 1.6% at $4,778.95 an ounce by 05:46 ET (09:46 GMT), after earlier reaching its highest point since March 19. U.S. gold futures for June delivery rose by 2.6% to $4,807.34 an ounce.

Trump said in a social media post that he would suspend military action against Iran for two weeks, adding that the U.S. had already achieved its core military objectives.

Earlier in the day, Trump had warned that all of Iranian “civilization" would be eradicated if Tehran failed to reopen the Strait of Hormuz by his 8:00 p.m. Eastern deadline.

The ceasefire, brokered by Pakistan after last-minute diplomatic efforts, is conditional on Iran ensuring the safe reopening of the Strait of Hormuz, a key artery for roughly 20% of global oil flows.

Iran also signaled a conditional willingness to de-escalate, saying safe passage through the strait would be possible during the ceasefire period, provided hostilities were halted and vessels coordinated with Iranian authorities.

Trump also said on Wednesday that the U.S. would help ease the traffic buildup in the strait.

Oil price plunge, dollar slips

Markets reacted swiftly, with oil prices plunging by more than 15% and risk assets rallying, while the dollar came under pressure.

The U.S. dollar index, which tracks the greenback against a basket of currency pairs, fell, making bullion cheaper for holders of other currencies.

Despite bullion’s traditional appeal as a safe-haven asset, it had come under pressure last month as oil prices surged sharply, stoking inflation concerns and raising expectations that the U.S. Federal Reserve could keep interest rates higher for longer. Gold tends to underperform in elevated rate environments.

Market participants were also looking ahead to the U.S. March consumer price index (CPI) report due on Friday, which is expected to provide one of the first clear indications of the impact of the recent surge in energy prices due to the war.

Economists expect headline inflation to have accelerated on a monthly basis, driven largely by higher fuel costs, potentially complicating the outlook for Federal Reserve policy.