Stock markets swing and oil prices fall after Trump postpones strikes on Iran power plants

Gold prices fell sharply by 2.5% to $1,388/oz following US President Trump's announcement of a five-day postponement of military strikes on Iranian power plants amid ongoing diplomatic talks. The deferment alleviated fears of a broader Middle East conflict, resulting in a 10% drop in Brent crude oil to $101 per barrel and a softer US dollar, as geopolitical risk premiums unwound. The geopolitical tension around the Strait of Hormuz, a key artery for 20% of global oil and LNG supplies, has triggered a market upheaval akin to the 1970s twin oil shocks, according to IEA chief Fatih Birol. However, Trump's decision to delay action and the productive tone of talks with Iran reduced immediate tail risks for energy markets. Major European equity indices reversed early losses, and UK 10-year bond yields eased slightly, reflecting reduced risk premiums. The volatile energy landscape continues to pressure inflation and central bank policy outlooks, keeping gold vulnerable due to expected rate hikes. Market participants will closely monitor developments over the next five days as talks proceed, with key risk being a resumption or escalation of conflict that could again drive energy prices, safe-haven demand, and gold higher. The UK government is preparing an emergency response to mitigate economic impacts from rising energy costs, a factor that indirectly influences gold through inflation expectations and currency moves. The market remains positioned for uncertainty around the geopolitical trade balance between risk appetite and safe-haven asset flows.