The core event driving market movements is the growing optimism for a resolution to the Iran-US conflict, following statements from US President Donald Trump and Iranian President Masoud Pezeshkian. Trump announced on Tuesday that the US could wrap up its military operation against Iran within two to three weeks, emphasizing that Tehran does not need to make a deal for the war to end [1][2]. Iranian President Pezeshkian expressed openness to de-escalation if specific guarantees are secured, while Foreign Minister Abbas Araghchi called for a full end to the war and compensation for damages, maintaining some uncertainty [2][3].
Gold (XAU/USD) touched a nearly two-week high during the Asian session on Wednesday, with bulls aiming to extend a four-day uptrend beyond the $4,700 mark. The optimism surrounding a potential end to the conflict has undermined the US Dollar's global reserve currency status, supporting USD-denominated commodities like gold [1]. Technical indicators show gold breaking out above the 100-day SMA and the 38.2% Fibonacci retracement level, though momentum has stalled ahead of the 50% retracement, with MACD and RSI suggesting easing bearish momentum but not a full reversal [1].
Silver (XAG/USD), in contrast, halted its three-day winning streak and traded around $74.20 per troy ounce. The safe-haven demand for silver weakened as peace hopes grew, and the metal remains under pressure after a nearly 20% decline in March, its sharpest drop since September 2011, driven by energy market disruptions and inflation concerns [2]. Markets have shifted, with traders abandoning expectations of US rate cuts in 2026, reversing earlier projections of two cuts before the conflict [2].
The Pound Sterling (GBP) edged higher, rising 0.12% to near 1.3242 against the US Dollar during the Asian session, as demand for riskier assets improved on Iran's willingness to end the war. The GBP was strongest against the New Zealand Dollar, up 0.27% [3]. Despite diminished safe-haven demand for the US Dollar, its downside is expected to remain limited due to sustained high oil prices, which discourage Federal Reserve officials from easing monetary conditions [3].
Market attention is set to shift to upcoming US macro releases, including the ADP report, Retail Sales, ISM Manufacturing PMI, and the closely-watched Nonfarm Payrolls report on Friday. Trump will address the nation Wednesday night to update the public on the Iran war, and speeches by influential FOMC members are expected to drive USD demand and influence gold price dynamics [1][3].
CONCLUSION
Growing optimism for a resolution to the Iran-US conflict has boosted gold prices and risk assets like the Pound Sterling, while silver has weakened amid reduced safe-haven demand. Despite the positive sentiment, uncertainty remains due to Iran's demand for guarantees and compensation. Upcoming US economic data and geopolitical developments are expected to continue driving volatility and influencing market direction.