* Ceasefire comes hours before Trump's deadline

* Iran says talks with U.S. to begin Friday in Islamabad

* Gold has lost over 8% since the Iran war erupted on

February 28

* March Fed minutes due at 1800 GMT

(Adds comment, details and updates prices)

By Anmol Choubey

April 8 (Reuters) - Gold prices climbed to a near

three-week high on Wednesday as markets reassessed near-term

risks after U.S. President Donald Trump agreed to suspend

bombing and attacks on Iran for two weeks, easing fears of

energy-driven inflation.

Spot gold was up 2.5% at $4,819.25 per ounce, as of

0534 GMT. Earlier in the session, bullion rose more than 3% to

its highest level since March 19.

U.S. gold futures for June delivery gained 3.5% to

$4,847.70.

Trump said Washington had agreed to a two-week pause in

attacks and received a 10-point proposal from Iran what he

described as a workable basis for negotiations.

His comments followed earlier warnings that Tehran must

reopen the Strait of Hormuz or risk U.S. retaliation on its

civilian infrastructure.

"People went into this session thinking that escalation was

very likely, but the announcement of a two-week truce kind of

upended that expectation and that was gold positive," said

Nicholas Frappell, global head of institutional markets at ABC

Refinery.

Iran's Supreme Security Council said negotiations with the

United States would begin on April 10 in Islamabad, after it

submitted its proposal via Pakistan, although it added that the

talks did not signal an end to the war.

Rising energy prices could fuel inflation and complicate

central banks' decision on interest rates. While gold is often

seen as an hedge against inflation and uncertainty, its appeal

tends to weaken in a high-interest-rate environment as it offers

no yield.

Markets are now awaiting minutes, due later in the day, from

the Fed's meeting held in March.

Gold, which started the year on a strong note, has fallen

more than 8% since the Iran war erupted on February 28.

"This is a knee-jerk relief rally and it remains to be seen

if Iran complies. For gold, the 200 day-moving-average at $4,930

and then $5,000 will be key hurdles. Similarly, $80-$81 is a

important level for silver," independent metals trader Tai Wong

said.

Spot silver jumped 5.5% to $76.91 per ounce, platinum

gained 3.9% to $2,034.65 and palladium added 4.9%

at $1,541.71.