Donald Trump announced an end to the US war with Iran. Against that backdrop, demand for risk assets, including gold, is picking up. How long can the positive sentiment last?

A wave of optimism has hit the markets. Crude oil prices are easing, but not as sharply as they did a short time ago. Futures for both benchmark crude grades remain above the key $100/bbl mark, reflecting the view that the conflict has not disappeared but instead moved into a low?intensity phase in which the US will try to strangle Iran via blockades on multiple fronts. In my view, this scenario is driven by two factors: first, the end of the 60-day period during which the president can conduct undeclared hostilities; second, the fear of large-scale losses if a ground operation were launched.

For now, market participants are pricing in the positive news of an "end to the war." But first, a snapshot of market action.

European trading is generally in positive territory today. Major European stock indices, with the exception of the UK, are up. Crypto assets are also rising on a weaker dollar and broad positive sentiment. On Forex, the US dollar has fallen noticeably — the DXY is down 0.37% at about 98.09. The Japanese yen is receiving noticeable support against the dollar, which the market attributes in part to covert FX interventions.

But the question is how long this mood will last. What can we expect not only today but in the near term?

Consider the prospects of an "end to the war" in the Middle East. I have serious doubts that US actions will produce a durable peace, since the parties essentially remain in place. Markets will closely watch incoming US economic data, whose dynamics will affect other financial markets. Payroll reports from ADP and from the Treasury will play a meaningful role. Yes, that data is important, but given the current geopolitical backdrop, its impact is likely to be local and limited. Historically, the positive reaction to such headlines tends to last at most one or two days, as we have seen repeatedly.

Forecast of the day

GOLD

Gold has gained materially on hopes for a Middle East peace, which is pushing prices higher. There is a chance of a move toward $4,740.00, and possibly to $4,783.15. A buy level on a dip could be $4,699.50.

#CL (WTI)

US crude prices have halted their decline. If they do not fall below $93.30, a local recovery toward $100.00 can be expected. $94.20 could be a nice level to buy.