Geopolitical Risk Eases on US-Iran Deal Hopes

Reports of progress toward a US-Iran ceasefire agreement broadly reduced demand for safe-haven assets, pressuring the US Dollar toward a weekly loss against a basket of currencies. This optimism contributed to gains in the Euro, Pound Sterling, and commodity-linked currencies, while also pushing West Texas Intermediate crude oil prices lower. However, some market caution remained as a US official noted a deal was not yet finalized, leading to some conflicting movements in the dollar.

Precious Metals See Divergent Moves

Gold's recent recovery stalled as markets weighed competing factors, with the metal oscillating in a narrow range amid what one report called "Iran uncertainty." The reduced geopolitical risk was offset by firm US inflation data which reinforced expectations for future Federal Reserve interest rate hikes. In contrast, silver prices gained for a second consecutive day, with some analysis attributing the move to an easing of broader interest rate concerns.

Central Bank Policies Influence Currencies

The Reserve Bank of New Zealand's governor issued hawkish commentary, signaling that interest rates would likely need to rise sooner and more steeply to address inflation, which provided a lift to the New Zealand Dollar. Elsewhere, the People's Bank of China set its daily USD/CNY reference rate at a stronger level for the yuan than the previous day. These actions occurred against a backdrop of persistent expectations for Federal Reserve policy tightening, a factor influencing precious metals sentiment.