According to multiple reports, the United States and Iran are close to finalizing a deal to end the ongoing conflict, with Axios stating that the agreement would involve lifting restrictions on transit through the Strait of Hormuz, Iran committing to a moratorium on nuclear enrichment, and the US agreeing to lift sanctions and release billions in frozen Iranian funds. The US expects a response from Iran on several key points within the next 48 hours, and a Pakistani source involved in the peace efforts confirmed that the deal is close to being finalized [1].
The news has triggered significant risk flows in financial markets. The US Dollar Index fell more than 0.6% on the day to near 97.90, while US stock index futures rose between 0.65% and 1.1%. Gold prices surged about 3% to near $4,700 [1]. ING analysts Warren Patterson and Ewa Manthey noted that gold rose as the US-Iran ceasefire appeared to hold, easing fears of a broader conflict while maintaining some safe-haven demand. They added that a more durable truce would reduce energy-led inflation risks and lower the chance of further Federal Reserve tightening, which is supportive for non-yielding assets like gold. However, they cautioned that a stronger dollar or renewed Fed pushback on easing remains a downside risk for gold [2].
In currency markets, the British Pound (GBP) accelerated its recovery against the US Dollar (USD), reaching session highs at 1.3595 after rebounding from weekly lows near 1.3500. This move was attributed to growing hopes that the Middle East conflict might be nearing its end, which weighed on the safe-haven USD and supported the GBP. US President Donald Trump announced a pause in the Project Freedom plan to escort vessels out of the Strait of Hormuz, citing 'great progress' in peace negotiations with Tehran. US Secretary of State Marco Rubio stated that the US had achieved all objectives in the war against Iran and that Operation Epic Fury is over, suggesting no intention to resume hostilities [3].
Despite ongoing uncertainty about the Strait of Hormuz, which remains closed with no plan to reopen, and continued attacks on Gulf countries, investors are currently overlooking these risks. The focus in the UK is on the upcoming S&P Global PMI release, expected to confirm accelerated sector activity in April, which could further support the Pound. In the US, attention is on the ADP Employment Change, anticipated to show increased job creation in April, setting the stage for the Nonfarm Payrolls report and further monetary policy analysis [3].
Meanwhile, World Gold Council data showed that central banks were net sellers of gold in March, with net sales of around 30 tons. Turkey led the selling, reducing holdings by 60 tons to support FX liquidity, while Poland added 11 tons in March and 31 tons year to date [2].
CONCLUSION
Markets responded positively to news of a potential US-Iran peace deal, with risk assets rallying, the US Dollar weakening, and gold prices surging. While optimism prevails, some uncertainties remain regarding the Strait of Hormuz and ongoing regional tensions. Forward-looking data releases and central bank actions will continue to shape market sentiment in the coming days.