Global financial markets experienced heightened volatility as renewed geopolitical tensions between the United States and Iran led to the re-closure of the Strait of Hormuz and a series of retaliatory actions. Gold (XAU/USD) opened the week with a bearish gap, trading around $4,808 after recovering from an intraday low near $4,737, as investors weighed the implications of the ongoing US-Iran conflict and the expiration of a two-week ceasefire set for Wednesday [1][3]. The US Navy's interception and boarding of an Iranian cargo vessel in the Gulf of Oman prompted Tehran to condemn the move as 'armed piracy' and threaten retaliation, further clouding hopes for de-escalation [1][3][5][6][7]. Iran's Foreign Ministry spokesperson Esmail Baghaei stated there are currently no plans for a second round of negotiations with the US, accusing Washington of not being serious about diplomacy and violating ceasefire terms [1][3][5][6].
The closure of the Strait of Hormuz and continued naval blockades have kept oil markets on edge. Brent crude rebounded sharply to $95/bbl, with West Texas Intermediate (WTI) trading around $86.50, up roughly 3.20% on the day [1][2][4]. Societe Generale revised its end-2026 Brent price forecast upward from $79/bbl to $85/bbl, citing a roughly 42% drop in OPEC supply in March and expectations that full supply normalization may not occur until late 2026 [4]. Brown Brothers Harriman noted that Brent oil prices are nearly $10 higher from Friday’s $86 a barrel low, but expects the worst of the energy shock may be over, with the US Dollar Index (DXY) likely to remain anchored in the 96.00–100.00 range due to interest rate differentials [2].
Currency markets reflected a risk-off sentiment, with the US Dollar gaining modestly against most major peers. The Australian Dollar (AUD) and New Zealand Dollar (NZD) underperformed, with AUD/USD down 0.15% to around 0.7155 and NZD/USD slipping by 0.06% to 0.5880, as risk appetite diminished [5][6][7]. The US Dollar Index (DXY) traded slightly higher around 98.20–98.30, while S&P 500 futures were 0.55% lower ahead of Monday’s opening [5][6][7]. The USD/CHF pair remained capped below 0.7845, reflecting cautious sentiment as investors awaited further developments in US-Iran negotiations [7].
Gold’s outlook remains uncertain, with the metal trapped in a range below $4,850 and technical indicators showing a lack of clear bias [3]. Despite its traditional safe-haven status, gold has struggled to attract sustained demand amid expectations that the Federal Reserve may keep interest rates elevated for longer due to persistent inflation risks from higher energy prices [1][3][6]. Meanwhile, OCBC strategists highlighted that the Bank of Japan faces credibility risks after the energy shock, with markets expecting a 25bp rate hike on 28 April to restore confidence; failure to act could see USD/JPY push into the 160s and prompt intervention [8].
Looking ahead, markets remain focused on the expiration of the ceasefire, potential US-Iran negotiations, and key economic data releases such as US Retail Sales and the S&P Global PMI. The trajectory of oil and gold prices, as well as currency movements, will likely hinge on further geopolitical developments and central bank policy responses [1][2][3][4][5][6][7][8].
CONCLUSION
The escalation of US-Iran tensions and the re-closure of the Strait of Hormuz have triggered significant volatility in gold, oil, and currency markets, with risk assets under pressure and safe-haven demand supporting the US Dollar. The outlook for gold and oil remains highly sensitive to geopolitical developments and central bank policy signals. Investors are expected to remain cautious as they monitor the expiration of the ceasefire and the potential for renewed negotiations or further escalation.