Shifting dynamics in US-Iran negotiations have sparked a flight to safety, with precious metals leading declines and global equities facing pressure.
According to media reports on Thursday, the scheduled follow-up talks in Switzerland involving Iran, the United States, and European nations have been postponed due to Israel's continued military actions against targets in Lebanon. Coinciding with this, the US administration publicly called for an Israeli ceasefire. The Swiss foreign ministry subsequently confirmed the formal cancellation of the talks set for that day. This development has cast doubt on the ability of both nations to finalize the details of their nuclear agreement within the stipulated 60-day window.
The news immediately impacted markets. Spot gold fell over 2% on the day, while spot silver dropped by 3.4%. The MSCI All-Country World Index declined 0.2%, paring its weekly gains. An Asian equities benchmark retreated 0.9% after a five-day streak of record highs. S&P 500 futures were down 0.5%. The US Dollar Index broke above the 101.00 level, reaching its highest point since May 2025. Market liquidity was further constrained by holidays in the US, China, and Hong Kong, intensifying the risk-off sentiment ahead of the weekend.
This caps a pivotal week for global markets, marked by a provisional US-Iran peace accord, the Federal Reserve's first policy meeting under new leadership maintaining a hawkish stance, and the Bank of Japan raising interest rates to levels not seen since 1995. Despite these multiple shocks, global equity indices still managed to post weekly gains exceeding 1%, partly buoyed by sustained enthusiasm for artificial intelligence-related trading.
Key Market Movements
The Asian equities benchmark fell 0.9% following its record-breaking rally.
S&P 500 futures declined 0.5%, while Nasdaq 100 futures dropped 1%.
The US Dollar Index surged past 101.00, a high not seen since May 2025.
The yield on the US 30-year Treasury note fell 3 basis points to 4.9%, while 10-year yields in Japan and Australia edged higher.
Brent crude oil prices slid below $80 per barrel, marking a weekly loss of approximately 9%.
Spot gold fell over 2% intraday, with spot silver down 3.4%.
Negotiation Hurdles Cast Doubt on Agreement Implementation
Earlier on Thursday, a US official indicated that the 60-day negotiation period for sensitive details outlined in the signed "memorandum of understanding" had officially commenced, describing the deal as a "win-win" for the US. However, the cancellation of the follow-up talks in Switzerland has now fueled significant uncertainty about the timeline for implementing the agreement.
"While the geopolitical clouds are clearing after the signing, markets have seen reversals before," said Josh Gilbert, Chief Analyst for Asia Pacific and the Middle East at eToro. "The real hard work is only just beginning, and investors are likely to remain cautious until the deal is truly ironclad and full navigation through the Strait of Hormuz is restored."
Adding to the cautious outlook, the President of Kawasaki Kisen Kaisha Ltd., Takenori Igarashi, stated at the company's annual shareholder meeting in Tokyo that full resumption of transit through the Strait of Hormuz will take time as various security measures are still being put in place.
Gold Extends Weekly Losing Streak as Goldman Revises Forecast
Gold prices continued their downward trend this week, on track for a third consecutive weekly decline. The pressure is multifaceted: the Federal Reserve's hawkish posture has reinforced expectations for higher interest rates, while the initial optimism from the US-Iran accord is fading, further eroding gold's safe-haven appeal.
Goldman Sachs Group Inc. has revised its year-end gold price forecast downward by $500 per ounce. As the Fed's stance became clearer, the yield on the 2-year US Treasury note stabilized near 4.18% after surging 13 basis points in the previous session to a more than one-year high.
Crude Oil Plunges 9% for the Week as Hormuz Normalization Lags
Brent crude prices fell below $80 a barrel, representing a weekly drop of around 9%. Following the signing of the provisional US-Iran peace deal, the gradual normalization of shipping through the Strait of Hormuz has alleviated the largest supply shock in the history of the global oil market, prompting a sharp correction in prices.
This rapid pullback means oil futures have nearly erased all the gains accrued since the outbreak of hostilities earlier this year, which began in February after US and Israeli strikes on Iran over its nuclear program.
"The repricing this week has been violent, partly because Iranian oil supply is coming back almost overnight," said Tony Sycamore, a market analyst at IG Australia, in a Bloomberg Television interview. "What we face now is execution risk. There are still many details to be ironed out."
Dollar Strengthens, Bond Markets Diverge, Yen Under Pressure
The broad US dollar index rose 0.1%, bringing its weekly gain close to 1%. The Japanese yen remained a central focus in currency markets, trading near its lowest level in nearly four decades. Japan's Finance Minister, Satsuki Katayama, stated that the government is prepared to take decisive action against speculative currency moves.
Bond markets showed a split performance. The decline in the US 30-year Treasury yield to 4.9% suggests markets view long-term inflation as remaining contained, while the relative stability in the 2-year yield reflects persistent expectations for near-term rate hikes. US Treasury cash market trading was suspended in Asia due to a US holiday. Meanwhile, 10-year government bond yields in Japan and Australia moved higher.
The British pound edged lower against the dollar. Political uncertainty in the UK increased after Andy Burnham won a parliamentary by-election, positioning him as a strong challenger to Prime Minister Keir Starmer for the Mayor of Greater Manchester role. The Bank of England held its benchmark rate at 3.75% on Thursday, describing recent oil price declines as "encouraging," although two of its nine policy committee members voted for an immediate 25-basis-point hike, citing persistent inflation. Analysts cited by Bloomberg warned that UK political and fiscal risks could exert further downward pressure on sterling.
Further updates will follow as the situation develops.
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