(Reuters) - Gold prices edged higher on Wednesday to their highest in nearly two weeks, supported by a weaker dollar as U.S. President Donald Trump said the war with Iran could wind down within two to three weeks.
Spot gold rose 0.4% to $4,685.79 per ounce by 0228 GMT, having hit its highest level since March 20 at $4,723.21 earlier in the day. U.S. gold futures for April delivery gained 0.8% to $4,713.40.
"Talks that the U.S. might wrap up the war in two to three weeks even if the Strait (of Hormuz) is not reopened reinvigorated the U.S. equity markets and pulled gold higher along with it," said Marex analyst Edward Meir.
U.S. President Donald Trump said Tehran did not have to make a deal as a prerequisite for the conflict to wind down.
Trump will provide an update on Iran in an address to the nation at 9 pm on Wednesday (0100 GMT on Thursday).
Global equity and bond markets jumped on speculation of a potential de-escalation in the Middle East conflict.
"However, the upside (to gold prices) is being limited due to the fact that interest rates can move higher if inflationary expectations reignite," Meir said.
Gold fell more than 11% in March in its steepest monthly fall since October 2008 due to rising expectations of hawkish monetary policy and as the dollar emerged as a safe-haven winner since the Iran war started on February 28.
Gold tends to thrive in a low-interest-rate environment as it is a non-yielding asset.
"Should geopolitical tensions de-escalate further, then expectations for Fed easing could return. In such a scenario, real yields can ease, providing support for gold," said Christopher Wong, a strategist at OCBC.
Spot silver fell 0.8% to $74.53 per ounce, platinum gained 0.7% to $1,963.22 and palladium was up 0.6% at $1,484.84.