On Monday, the U.S. and Iran announced a preliminary peace agreement aimed at ending nearly four months of military conflict, which is set to be formally signed in Geneva on Friday. The deal includes the reopening of the Strait of Hormuz, a crucial maritime route that typically carries one-fifth of the world’s oil and liquefied natural gas (LNG). Following the announcement, all three major U.S. stock indexes rose over 1%, with the Nasdaq climbing approximately 3%, while West Texas Intermediate Crude dropped 5% to $80 a barrel, the lowest in over three months.
Gold prices surged nearly 3.5% due to the anticipation of declining oil prices and lower inflation expectations, reversing previous headwinds driven by the Iran conflict. Despite a significant drop of nearly 25% from its all-time high of about $5,600 at the end of January to around $4,200, market dynamics suggest a buying opportunity as technical indicators signal a potential upward trend.
However, caution remains as the agreement is not yet finalized and underlying issues regarding Iran’s nuclear program and sanctions persist. Moreover, structural factors like rising national debt and central bank accumulation of gold remain significant and could influence future market movements.
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