Dollar plunges, gold surges as Middle East ceasefire eases tensions

Financial markets reacted swiftly to news of a diplomatic breakthrough in the Middle East, with the US dollar tumbling against major currencies and precious metals rallying as a two-week ceasefire between Iran and the United States took hold. The dollar declined approximately 1% against the euro, pushing the USD/EUR exchange rate to 0.85, and fell 1.1% against the British pound to 0.72 as of 0645 GMT. Investors shifted away from the safe-haven greenback as geopolitical risk premiums began to unwind.

Gold and silver rally on truce hopes

Gold prices surged around 2.7% to $4,830 per ounce, while silver posted an even more dramatic increase, jumping 6.33% to $77.50 per ounce. The precious metals rally came despite the ceasefire news—typically a bearish signal for safe-haven assets—suggesting that markets are also pricing in potential inflationary effects from the prolonged conflict and expectations of slower US interest rate cuts.

Pakistan brokers two-week truce

Following Pakistani Prime Minister Shehbaz Sharif’s proposal for a two-week ceasefire, President Trump announced he had agreed to “suspend the bombing and attack of Iran for a period of two weeks.” Sharif also invited Iranian and US delegations to Islamabad on Friday and confirmed that Washington, Tehran, and their respective allies have agreed to an immediate ceasefire across all conflict zones. For Türkiye, which has consistently called for diplomacy and hosted multiple rounds of talks between regional actors, the Pakistan-brokered truce represents a welcome but fragile first step. Ankara continues to urge all parties to extend the pause into a permanent ceasefire and address the root causes of the conflict.