PRECIOUS-Gold hits nearly three-week high after US-Iran ceasefire

By Ashitha Shivaprasad

April 8 (Reuters) - Gold scaled nearly a three-week peak on Wednesday, as the U.S. dollar and oil prices fell after Washington and Tehran agreed to a two-week truce in their war, calming inflation worries.

Spot gold XAU= was up 0.8% at $4,740.42 per ounce, as of 2:05 p.m. EDT (1805 GMT). Earlier in the session, bullion rose more than 3% to its highest level since March 19.

U.S. gold futures GCcv1 for June delivery settled 2% higher at $4,777.20.

"The ceasefire is calming markets and easing pressure. It could help roll back some inflationary pressures and might open the door for Fed rate cuts, which is bullish for gold," said Edward Meir, a Marex analyst.

"But it's still very tenuous. There are so many elements that need to be negotiated. They could easily unravel, and it could be a short-term recovery in all the markets. We're still not out of the woods," he added.

The U.S. and Iran agreed to a two-week ceasefire brokered by Pakistan. But even as Israel and the United States paused their attacks on Iran, Israel escalated its parallel war in Lebanon.

Oil prices fell below $100 a barrel on the ceasefire news. O/R.

Meanwhile, the U.S. dollar fell against a basket of major currencies, making greenback-priced bullion more affordable for other currency holders. USD/

Spot gold has declined 10% since the start of the U.S.-Israeli war against Iran on February 28, as higher energy prices stoked inflation concerns and prompted investors to scale back rate‑cut hopes. Elevated interest rates tend to pressure the non‑yielding metal despite it being an inflation hedge.

According to the minutes of Federal Reserve's March 17-18 meeting, a growing group of policymakers felt last month that rate hikes might be needed to counter inflation that continued to exceed the central bank's 2% target, particularly given the impact of the Iran war. FEDWATCH

U.S. inflation indicators, including the Personal Consumption Expenditures Price Index and Consumer Price Index, are due to be released later this week.

Spot silver XAG= jumped 3.3% to $75.35 per ounce, platinum XPT= gained 5.3% to $2,060.45 and palladium XPD= added 7.6% to $1,581.33.