Key keywords: gold price surge, 2% gold rally, oil price slump, inflation fears easing, Trump Iran nuclear talks, Federal Reserve rate hike outlook, safe-haven asset, US-Iran diplomatic negotiations Spot gold prices rallied 2% in Wednesday’s intraday trading, climbing to $1,982 per ounce to hit a three-week high, as a sharp drop in global crude oil prices cooled market concerns over persistent inflation, triggered by unconfirmed reports that former U.S. President and current presidential candidate Donald Trump plans to restart negotiations with Iran over a revised nuclear deal if he wins the 2024 election. Brent crude futures fell more than 4.5% to $77.8 per barrel on the news, marking the largest single-day drop in six weeks, as market participants priced in the possibility that revived diplomatic talks could lead to the lifting of U.S. sanctions on Iranian oil exports, which would add an estimated 1.6 million barrels of crude per day to global supply and eliminate the current supply deficit that has kept oil prices elevated for most of 2024. The slump in oil prices immediately eased investor anxiety around sticky inflation, which has forced the U.S. Federal Reserve to hold interest rates at a 23-year high of 5.25-5.5% for the past nine months. Traders now estimate the probability of a Fed rate cut as early as September 2024 has risen to 68%, up from 42% earlier this week, according to CME Group’s FedWatch Tool. Lower interest rates boost the appeal of non-interest-bearing safe-haven assets like gold, as they reduce the opportunity cost of holding the precious metal compared to U.S. Treasuries and cash. Prior to this week’s rally, gold had traded in a tight range between $1,920 and $1,960 per ounce for more than two months, as hawkish commentary from Fed officials and stronger-than-expected U.S. economic data dimmed hopes for imminent rate cuts. The latest catalyst also pushed the U.S. Dollar Index down 0.6% against a basket of major currencies, making dollar-denominated gold cheaper for international buyers and further supporting price gains. Analysts at Goldman Sachs noted in a research note published Wednesday that if the proposed Trump-Iran talks move forward and lead to a formal deal, oil prices could fall to $70 per barrel by the end of 2024, which would help pull U.S. headline inflation down to the Fed’s 2% target two quarters earlier than previously projected. The bank raised its 12-month gold price forecast to $2,150 per ounce from $2,050 per ounce following the news. Data from the world’s largest gold-backed ETF, SPDR Gold Trust, showed its holdings increased by 12.3 tons on Wednesday, the biggest single-day inflow since March 2024, indicating growing institutional demand for the precious metal.