US-Iran Talks Outcome Pivotal for Oil, Metals, and Global Markets

US-Iran Ceasefire Triggers Volatility in Market Sentiment

The escalating US-Iran rhetoric, followed by a two-week ceasefire framework and signs of a fragile truce, led to significant volatility in market sentiment last week ended April 10. The US Dollar Index fell 1.5 percent to below 99, its sharpest weekly drop since January, as safe-haven demand eased on improving geopolitical sentiment.

The US Consumer Price Index (CPI) rose to 3.3 percent annually, with a sharp 0.9 percent monthly increase reflecting elevated energy costs, though core inflation remained contained at 2.6 percent. Softer growth signals, with the University of Michigan consumer sentiment dropping to 47.6 and the Institute for Supply Management (ISM) Services PMI easing to 54, added to dollar weakness. US equities posted their best weekly performance since November, with the S&P 500 gaining 3.6 percent, the Nasdaq rising 4.7 percent, and the Dow Jones adding 3 percent, as traders looked toward the prospect of a durable peace.

Precious Metals Rally on Dollar Weakness and Ceasefire Optimism

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In precious metals, COMEX gold rose over 2 percent and silver rallied roughly 5 percent, registering a third consecutive weekly gain supported by dollar weakness and ceasefire optimism. Both metals pulled back from weekly highs, gold briefly touched $4,890 per ounce before closing below $4,800, while silver edged back from above $77 per ounce to close near $76, as the fragile truce and continued Strait disruptions prompted profit taking.

Notably, gold's safe-haven performance through the conflict was tempered by liquidity stress, with investors forced to liquidate bullion to cover losses elsewhere. April saw a 21 tonne inflow into gold ETFs, indicating early signs of stabilisation in investor sentiment, following a record 84 tonne outflow in March on deleveraging pressures rather than a deterioration in underlying fundamentals.

Precious Metals Comparison

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On the daily chart, MCX Gold Futures held firm near the 61.8 percent retracement zone (around Rs 1,54,500 per 10 gram) and moved largely sideways through the past week, indicating consolidation under resistance. The immediate hurdle is placed at Rs 1,57,700, which currently appears difficult to breach; however, a decisive breakout above this level would also mean a move above the descending trendline, potentially opening upside towards Rs 1,61,300.

Base Metals Extend Gains on Geopolitical Risk Premia Easing

Base metals extended gains for a third consecutive week, led by copper which rose nearly 4 percent to settle near $12,845 per tonne. Aluminium and zinc posted modest advances. The moves were primarily sentiment-driven, underpinned by easing geopolitical risk premia, a softer dollar, and incrementally firmer signals from China, higher import premiums and a rebound in manufacturing activity lending support to the physical narrative.

Base Metals Comparison

Crude Oil Markets See Sharp Reversal on Ceasefire

Crude oil markets saw a sharp reversal this week, with WTI and Brent closing below $96 per barrel after witnessing the biggest single-day decline since the 2020 pandemic crash. The physical market presented a starkly different picture, with few tankers observed leaving the region and dated Brent remaining significantly higher than futures, reflecting continued tight supply conditions.

Despite the ceasefire, underlying risks remain. Iran has raised concerns over ongoing regional strikes and security issues, while tensions in Lebanon continue to add uncertainty. Saudi Arabia has also experienced a reduction in production capacity due to earlier attacks, keeping regional supply under pressure. While diplomatic progress has reduced immediate upside pressure, limited physical oil flows continue to support prices and prevent a deeper correction.

Looking Ahead: US-Iran Talks to Drive Market Sentiment

The outcome of the US-Iran talks in Islamabad will be the dominant market driver. A credible agreement would extend the oil decline, sustain the rally in metals and equities, and keep the dollar soft. A breakdown, however, would rapidly reprice supply risk, reverse risk asset gains, and send crude back toward the highs.