(Bloomberg) -- Gold extended gains after snapping a nine-day losing streak, after the US floated a proposal to end the war in the Middle East.

Bullion advanced as much as 2.8%, adding to a 1.6% jump in the previous session. The US drafted a 15-point plan intended to help bring the war with Iran to a close, while China has urged Tehran to engage in talks. Iran has yet to comment on the proposal.

Oil fell and equities climbed. Since the war began more than three weeks ago, gold has moved largely in tandem with stocks and in an inverse relationship with crude. Elevated energy prices have raised the risk of inflation, leading investors to bet that the Federal Reserve and other central banks will keep interest rates unchanged, or hike them. That’s a headwind for non-yielding bullion.

Selloffs in global stocks and bonds have also forced investors to ditch their positions in gold to raise cash, further amplifying losses in gold.

A reduction in investor positioning, reduced buying from the Middle East and expectations of rate hikes all weighed on gold, Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note Wednesday. “With some of these factors likely to reverse in the coming months, we view the current setback in gold prices as an opportunity to add positions.”

The market remained on edge as details of the US proposal stayed unclear and Iran kept up missiles and drone attacks overnight on Arab Gulf states and Israel. Meanwhile, the Trump administration is set to deploy soldiers from the 82nd Airborne Division to the Middle East, according to a person familiar with the matter.

Turkey’s central bank is also preparing an expanded toolkit to defend the lira from war-related volatility, which includes potentially using its vast bullion reserves. The bank has held discussions about possible gold-for-foreign-currency swap transactions in the London market, according to people familiar with the matter.

It’s not uncommon for central banks to sell spot gold and simultaneously agree to buy it back in the future. This allows them to access relatively cheap dollar funding by paying a small premium to buy back the bullion after a few months, typically in line with prevailing interbank borrowing costs.

Such moves do not represent a liquidation of reserves, said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. “In fact, the intent to use gold-for-FX swaps actually underscores the role of gold in reserves management.”

The massive accumulation of bullion by central banks since 2022 was a key driver of gold’s multiyear bull run, although the pace of buying had already slowed going into this year.