Gold set to shine? Markets brace for key jobs report as Iran tensions keep investors on edge

Markets are heading into a pivotal week as investors weigh conflicting signals around a potential US-Iran peace deal, while Friday’s US jobs report could provide fresh clues on the Federal Reserve’s next move.

Risk sentiment has improved at times on hopes that diplomatic progress could help ease geopolitical tensions, but investors remain cautious. Inflationary pressures, uncertainty over the path of US interest rates and the fragile global growth outlook continue to cloud the picture. Against this backdrop, the upcoming payrolls report could play a key role in shaping expectations for the Fed’s policy trajectory over the coming months.

Commentary from Lukman Otunuga, Head of Market Research at FXTM:

“Markets remain caught between cautious optimism over a potential US-Iran agreement and lingering concerns around inflation, interest rates and geopolitical risk. This week’s US jobs report could prove to be a major catalyst. If labour market data disappoints, expectations around future Federal Reserve policy may shift, weighing on the dollar and providing fresh support for gold.

At the same time, oil prices remain vulnerable to every twist and turn in the Middle East. While Brent suffered its steepest monthly decline since 2020 in May, renewed tensions have already sparked a sharp rebound. With uncertainty dominating the outlook, investors should brace for elevated volatility across commodities and broader financial markets.”