US-Iran Ceasefire Drives Risk-On Sentiment

A two-week ceasefire agreement between the United States and Iran has triggered significant market movements, with investors shifting toward risk-on positioning. The ceasefire announcement led to broad-based US Dollar selling as geopolitical tensions eased temporarily. However, cracks in the ceasefire agreement began to emerge later in the session, causing some stabilization in Dollar weakness.

Precious Metals Rally on Dollar Weakness

Gold advanced more than 0.70% to trade around $4,735, benefiting from the weaker US Dollar environment following the ceasefire news, though it pulled back from earlier three-week highs near $4,857. Silver showed even stronger performance, rising nearly 2% to trade around $74.50 after hitting an intraday high of $77.65, also supported by the broadly weaker Dollar.

US Dollar Index Under Pressure

The US Dollar Index experienced significant volatility, initially falling roughly 1% to touch lows around 98.50 as the ceasefire triggered risk-on Dollar selling. The DXY had weakened to four-week lows earlier in the session but found some support later, stabilizing near 99.10 amid safe-haven demand and expectations that the Federal Reserve will maintain a cautious approach to monetary easing.

Federal Reserve Policy Outlook Remains Hawkish

FOMC Minutes reinforced a "higher-for-longer" interest rate stance, with markets digesting implications for monetary policy amid the geopolitical developments. BNP Paribas analysts noted that US demand remains the primary inflation driver, though its contribution has moderated from post-Covid peaks. The Fed's cautious positioning on easing continues to provide underlying support for the Dollar despite short-term weakness.