US-Iran Agreement Sparks Broad Risk-On Sentiment

Financial markets saw a significant risk-on rally following reports of a preliminary agreement between the United States and Iran aimed at ending hostilities and reopening the Strait of Hormuz. This development sent global equity indices, including the Dow Jones Industrial Average, higher while causing crude oil prices to tumble. The shift in sentiment also impacted currency markets, leading to gains in risk-sensitive currencies like the Australian Dollar, though some initial rallies, like that of the British Pound, later reversed.

Gold Holds Gains as Iran Deal Eases Inflation Fears

Despite the broader risk-on appetite that typically weighs on safe-haven assets, gold prices remained firm. Market commentary suggests the US-Iran framework deal is easing concerns about energy-driven inflation, which in turn reduces expectations for aggressive Federal Reserve rate hikes. This view was supported by a drop in US Treasury yields to one-month lows, a move that generally benefits non-yielding precious metals.

Focus Shifts to Central Bank Decisions

Attention is turning to upcoming monetary policy announcements from major central banks. The Bank of Japan is widely expected to raise its key interest rate to its highest level in over three decades, though this anticipation has so far failed to strengthen the Japanese Yen. Meanwhile, the Reserve Bank of Australia is forecast to keep its Official Cash Rate unchanged, pausing after a series of hikes earlier in the year.