The US Dollar weakened and precious metals rallied on Monday following news that the United States and Iran reached a framework agreement to end the war in the Middle East, with a formal signing ceremony expected on Friday in Switzerland [1][2][3]. US President Donald Trump announced the immediate removal of the US naval blockade of Iranian ports, while Iran will reopen the Strait of Hormuz to commercial shipping [1][2][3]. Talks on Iran's nuclear program, sanctions relief, and the release of frozen Iranian assets will continue during the 60-day memorandum of understanding (MoU) period [1].
The Swiss Franc (CHF) strengthened against the US Dollar (USD), with USD/CHF trading around 0.7923, down 0.60% on the day [1]. The US Dollar Index (DXY) hovered near one-week lows at 99.46, while Silver (XAG/USD) rose 3.94% to $70.70 and Gold (XAU/USD) climbed more than 2.5% to $4,344, extending its recovery from a seven-month low of $4,023 last week [1][2][3]. West Texas Intermediate (WTI) Crude Oil fell to its lowest level in nearly three months, trading around $79 per barrel [2][3]. US equity index futures advanced between 1% and 2% [3].
The improved geopolitical environment has boosted market sentiment and risk appetite, reducing safe-haven demand for the US Dollar and supporting precious metals [1][2][3]. The decline in Oil prices has eased inflation concerns, leading traders to scale back expectations for further Federal Reserve (Fed) rate hikes this year [1][2]. However, US inflation accelerated to 4.2% in May, more than double the Fed's 2% target, suggesting borrowing costs could remain elevated for an extended period [1][2]. The Fed is widely expected to keep interest rates unchanged at its upcoming policy announcement on Wednesday, with investors closely watching comments from newly appointed Chair Kevin Warsh for guidance on future policy [1][2][3].
In Switzerland, inflation remains near the lower end of the Swiss National Bank's (SNB) 0%-2% target range, and the SNB is expected to keep interest rates unchanged at 0% at its decision on Thursday. A Reuters poll found all 28 economists surveyed expect the SNB to leave rates unchanged this year [1]. Despite the positive market reaction, some uncertainty persists as the full text of the US-Iran deal has not been published and reports of strikes in southern Lebanon continue, sustaining diversification demand for precious metals [3].
Technical analysis indicates that Gold remains under short-term pressure, holding below the 20-day Simple Moving Average near $4,414, while the Relative Strength Index (RSI) has recovered from oversold territory [2].
CONCLUSION
The US-Iran peace framework has triggered a rally in Gold and Silver, a stronger Swiss Franc, and a weaker US Dollar, as markets anticipate reduced geopolitical risks and lower inflationary pressures. However, with US inflation still elevated and the Fed expected to keep rates unchanged, investors remain cautious. The finalization of the peace deal and upcoming central bank decisions will be key for market direction in the coming days.