Oil prices fell more than 3% on Friday, hitting their lowest levels in nearly two months after US President Donald Trump canceled planned new strikes against Iran, easing fears of a broader escalation following the exchange of attacks earlier this week.

Brent crude futures dropped $3.13, or 3.46%, to $87.25 a barrel by 11:11 GMT, while US West Texas Intermediate crude fell $3.14, or 3.58%, to $84.57 a barrel. Both benchmarks touched their lowest levels since April 17.

A Western source told Reuters that a memorandum of understanding between the United States and Iran aimed at ending the Gulf conflict could be signed as early as Sunday, with Geneva emerging as the most likely venue for the signing ceremony.

Trump backed away from his threats of further military action on Thursday, while Iran's Mehr News Agency reported that final negotiations over the memorandum of understanding would focus on nuclear and economic issues, with Iran's missile program excluded from the talks.

Iran's IRNA news agency also reported that nuclear negotiations would take place over a 60-day period following the signing of the memorandum.

"Headlines are driving the market once again, with growing confidence in a deal and the reopening of the strait," said Tamas Varga, analyst at PVM Oil Associates.

He added that global and regional oil inventories remain low and could continue to decline even if an agreement is reached, as it would take time for oil flows to fully normalize.

Iran announced on Thursday that it was closing the Strait of Hormuz, where shipping activity had already been limited, warning that any vessel attempting to transit the waterway would be targeted.

The strait normally handles around one-fifth of global oil and liquefied natural gas shipments.

However, the US military said on social media that commercial vessels continue to transit through the waterway.

Analysts at ING said in a note on Friday that they believe the market could reach a "tipping point" by late July if oil flows do not resume before then, as low inventories and strong seasonal demand could push prices toward $120-$130 per barrel.

Meanwhile, Goldman Sachs lowered its average Brent crude price forecast for 2027 to $80 per barrel, citing stronger supply growth and weaker demand. However, the bank expects prices to remain above their 2025 average due to inventory rebuilding and a geopolitical risk premium linked to supply concerns.

On Thursday, OPEC cut its forecast for global oil demand growth in 2026 to 970,000 barrels per day from a previous estimate of 1.17 million barrels per day, marking the second consecutive downward revision.

At the same time, the group said oil consumption is expected to accelerate later on, raising its 2027 demand growth forecast to 1.73 million barrels per day, up 190,000 barrels per day from its previous projection.

Gold prices rose in European trading on Friday, extending their recovery for a second consecutive session from the lowest levels of 2026. The metal continued to benefit from bargain buying at lower levels, while a weaker US dollar and falling oil prices provided additional support after President Donald Trump announced that Washington and Tehran were moving closer to signing a peace agreement that could bring an end to the military conflict in the Middle East.

Lower oil prices are helping to ease concerns about accelerating inflation, potentially giving major central banks more room to keep interest rates unchanged in the near term while increasing expectations for rate cuts over the longer term.

The Price

• Gold prices today: Gold rose 0.8% to $4,246.39 per ounce from an opening level of $4,212.31, after touching an intraday low of $4,170.33.

• At Thursday's settlement, gold gained 3.45% after earlier falling to $4,023.86 per ounce, its lowest level since November 2025.

• In addition to bargain buying, gold rallied sharply after President Donald Trump announced the suspension of planned airstrikes against Iran.

US dollar

The US Dollar Index fell around 0.1% on Friday, extending losses for a second straight session and moving further away from two-month highs, reflecting continued weakness in the US currency against a basket of major and minor peers.

As a weaker dollar makes dollar-denominated bullion more attractive to holders of other currencies, the decline has provided additional support for gold prices.

Beyond profit-taking after the dollar's recent rally to two-month highs, the greenback has also come under pressure as hopes grow for a final agreement that could end the conflict in the Middle East.

Global oil prices

Oil prices fell around 3% on Friday, deepening losses for a second consecutive day and hitting their lowest levels in two months amid renewed hopes that the Strait of Hormuz could fully reopen to oil tanker traffic, allowing supplies to flow more freely into global markets.

Developments in the Iran conflict

• President Donald Trump unexpectedly announced a halt to planned military airstrikes against targets inside Iran, saying a preliminary agreement had been approved by senior leaders in Tehran.

• Trump stated that the final points of the peace agreement had been approved in principle by all parties involved.

• Countries participating in the framework reportedly include the United States, Israel, Saudi Arabia, the United Arab Emirates, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, and Egypt.

• Reports indicated that discussions regarding Iran had been elevated to the highest levels of Iranian leadership and had received preliminary approval.

• The naval blockade will remain in place until the agreement is finalized, with the time and location of the signing ceremony to be announced later.

• Iran said no final decision has been made regarding the agreement that Trump hopes to sign soon, as the relevant authorities continue reviewing its details.

• Trump maintained that the war with Iran has ended and said the agreement could be signed in Europe over the weekend in the presence of the Vice President.

• The G7 expects a memorandum of understanding between the United States and Iran to be signed in Geneva on Sunday.

US interest rates

• Goldman Sachs expects the Federal Reserve to leave interest rates unchanged throughout 2026 and postpone any rate cuts until 2027, citing stronger economic activity and continued job growth.

• With oil prices falling, CME Group's FedWatch Tool now shows the probability of a Federal Reserve rate hike in December declining from 67% to 55%.

• Markets have also reduced the probability of rates remaining unchanged in June from 98% to 95%, while the odds of a 25-basis-point rate cut have increased from 2% to 5%.

Gold outlook

Edward Meir, analyst at Marex, said gold prices are being driven almost entirely by geopolitical developments, and any further positive news regarding US-Iran peace talks would support the continuation of the current recovery.

Meir added that markets will closely watch for any signal that the Federal Reserve may consider raising interest rates. If policymakers begin to hint in that direction, he believes gold could fall below the $4,000 level.

SPDR Gold Trust

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged on Thursday, leaving total holdings at 1,013.64 metric tons, the lowest level since October 9, 2025.

The euro rose in European trading on Friday against a basket of global currencies, maintaining gains for a second consecutive day against the US dollar and heading toward a weekly advance after the European Central Bank raised interest rates for the first time in nearly three years in an effort to combat inflationary pressures stemming from the Iran conflict.

US President Donald Trump canceled planned military strikes against Iran and signaled that a peace agreement with Tehran could be close, helping to improve risk sentiment across global markets.

The Price

• Euro exchange rate today: The euro rose around 0.1% against the dollar to $1.1587, up from an opening level of $1.1579, after touching an intraday low of $1.1557.

• The euro ended Thursday up 0.4% against the US dollar following the ECB's policy decisions and Trump's announcement suspending US military strikes against Iran.

Weekly performance

For the week, which officially concludes with Friday's settlement, the single European currency is up about 0.6% against the US dollar and is on track to record its second weekly gain in the past three weeks.

European Central Bank

As widely expected, the European Central Bank raised interest rates by 25 basis points on Thursday, taking its benchmark rate to 2.40%. The move marked the first eurozone rate increase since September 2023 and was aimed at addressing inflationary pressures linked to the Iran conflict.

The ECB acknowledged that the effects of the Iran war and the energy crisis have intensified inflationary pressures across the eurozone and revised its inflation forecasts higher for both 2026 and 2027.

The central bank also stressed that future policy decisions will depend entirely on incoming economic data, geopolitical developments, and its assessment of underlying inflation trends.

ECB President Christine Lagarde said higher energy prices could push inflation above the bank's 2% target in the coming period. She also noted that the conflict in the Middle East has begun to weigh on economic activity across the eurozone.

European interest rates

• Reports indicate that the European Central Bank is considering pausing monetary policy normalization in July if energy prices remain at current levels.

• Money markets are currently pricing a roughly 50% probability of another 25-basis-point ECB rate hike in July.

• Market pricing for a 25-basis-point rate increase in September remains above 70%.

• Investors are awaiting additional eurozone data on inflation, unemployment, and wage growth to reassess those expectations.

Developments in the Iran conflict

• President Donald Trump unexpectedly announced a halt to planned military airstrikes against targets inside Iran, saying a preliminary agreement had been approved by senior leaders in Tehran.

• Trump stated that the final points of the peace agreement had been approved in principle by all parties involved.

• Countries participating in the framework reportedly include the United States, Israel, Saudi Arabia, the United Arab Emirates, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, and Egypt.

• Reports indicated that discussions regarding Iran had been elevated to the highest levels of Iranian leadership and had received preliminary approval.

• The naval blockade will remain in place until the agreement is finalized, with the time and location of the signing ceremony to be announced later.

• Iran said no final decision has been made regarding the agreement that Trump hopes to sign soon, as the relevant authorities continue reviewing its details.

• Trump maintained that the war with Iran has ended and said the agreement could be signed in Europe over the weekend in the presence of the Vice President.

The Japanese yen weakened in Asian trading on Friday against a basket of major and minor currencies, resuming losses that were briefly halted on Thursday against the US dollar. The currency moved closer once again to a six-week low and slipped back below the ¥160 threshold, a key level closely monitored by Japanese authorities as a potential trigger for intervention to support the local currency and curb excessive movements in the foreign exchange market.

The US dollar recovered part of its losses from the previous session as caution returned to financial markets after Iran confirmed that no final decision has yet been made regarding the agreement that US President Donald Trump hopes to sign in the near future.

The Price

• Japanese yen exchange rate today: The dollar rose about 0.3% against the yen to ¥160.30, up from an opening level of ¥159.87, after touching an intraday low of ¥159.86.

• The yen ended Thursday up 0.4% against the dollar, its first gain in three sessions, after earlier falling to a six-week low of ¥160.60.

• In addition to bargain buying at lower levels, the yen benefited after President Donald Trump announced a suspension of planned airstrikes against Iranian targets.

The ¥160 threshold

Japanese authorities continue to closely monitor currency market movements, particularly after the yen weakened beyond the key ¥160-per-dollar level, which is widely viewed as a threshold that could prompt renewed market intervention.

Sources told Reuters that Tokyo intervened several times in late April and early May to halt the yen's decline. At that time, the exchange rate reached ¥160.72 per dollar, its weakest level since July 2024.

Japanese officials have warned against excessive currency volatility and indicated that authorities could take decisive action against disorderly moves in the foreign exchange market.

Finance Minister Satsuki Katayama said the government is "prepared to take appropriate action" if currency markets experience excessive or speculative movements.

Japanese interest rates

• Market pricing for a quarter-point interest rate increase by the Bank of Japan at its June meeting remains above 95%.

• The Bank of Japan will meet on June 15-16 to assess the appropriate monetary policy tools for the world's fourth-largest economy.

US dollar

The US Dollar Index rose about 0.2% on Friday, recovering part of the heavy losses recorded in the previous session and reflecting renewed strength in the US currency against a basket of global peers.

The rebound comes as caution and risk aversion return to markets, particularly after Iran confirmed that final approval has not yet been granted for the peace agreement announced by President Donald Trump and that the terms remain under review by the country's senior leadership.

Developments in the Iran conflict

• President Donald Trump unexpectedly announced a halt to planned military airstrikes against targets inside Iran, saying a preliminary agreement had been approved by senior leaders in Tehran.

• Trump stated that the final points of the peace agreement had been approved in principle by all parties involved.

• Countries participating in the framework reportedly include the United States, Israel, Saudi Arabia, the United Arab Emirates, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, and Egypt.

• Reports indicated that discussions regarding Iran had been elevated to the highest levels of Iranian leadership and had received preliminary approval.

• The naval blockade will remain in place until the agreement is finalized, with the time and location of the signing ceremony to be announced later.

• Iran said no final decision has been made regarding the agreement that Trump hopes to sign soon, as the relevant authorities continue reviewing its details.

• Trump maintained that the war with Iran has ended and said the agreement could be signed in Europe over the weekend in the presence of the Vice President.