Why is the market still optimistic despite the continued deadlock in US-Iran negotiations?
2026-05-01 21:53:48
On Friday (May 1), during the Asian and European sessions, global risk appetite rebounded, the US dollar index and oil prices fell, while US stocks and gold rose slightly.
Latest news indicates that Iran has submitted a new proposal through Pakistan, focusing on ending the current conflict rather than advancing nuclear negotiations. This signal has directly triggered a rebound in market risk appetite.
As a result, international oil prices weakened in the short term, the US dollar index retreated slightly, and investors temporarily shifted from safe-haven assets to risk assets.
It is worth noting that Iran's proposal included a three-step framework: first, opening the Strait of Hormuz; then, the US lifting the maritime blockade; and finally, postponing nuclear negotiations. However, this proposal has been explicitly rejected by US President Trump, who emphasized that the blockade will continue until Iran makes concessions on the nuclear issue. This means that even though it is difficult for the negotiations to make any real progress, the market still interprets it optimistically. Why is that?
Despite a recovery in market risk appetite, the military pressure exerted by the United States and Israel has not stopped, but rather escalated.
The U.S. Central Command has drafted a plan for a “short and intense” airstrike against Iran, targeting Iranian infrastructure. Another option is to use ground forces to seize partial control of the Strait of Hormuz.
Israel has been making frequent moves, with Defense Minister Katz stating that "military operations against Iran may resume soon." In the past day alone, an additional 6,500 tons of military equipment, including aviation munitions, have arrived, bringing the total amount of military equipment received since February 28 to over 115,600 tons. The scale of procurement and transportation is expected to continue to expand.
Logically speaking, these high-profile military threats are more likely bargaining chips than a prelude to actual combat. If the US and Israel truly intend to start a war immediately, they would not need to disclose their military plans and equipment transport status in advance. Their core objective is to exert maximum pressure on Iran to force it to make greater concessions on key issues such as the opening of the Strait of Hormuz and its nuclear program.
According to Iran International, two sources familiar with the matter revealed that Iranian President Pezechzian and Iranian Parliament Speaker Ghalibaf are dissatisfied with the way Iranian Foreign Minister Araghchi conducts diplomatic work, especially in nuclear negotiations. They called for Araghchi's dismissal. This news echoes the US claim that there is no consensus within Iran, and in fact, it provides a way for the US to continue the ceasefire.
However, at the same time, the UAE issued travel bans against Iran, Lebanon, and Iraq, urging its citizens to leave the country as soon as possible. While this highlights the regional tensions, these details also made optimistic bulls in the market hesitant to take further risks.
The latest remarks by U.S. House Speaker Boris Johnson have become the focus of market attention. As a key figure in the Republican Party, Johnson explicitly stated that "the United States is not at war" and that Congress does not need to interfere in the Trump administration's actions against Iran. While seemingly supporting the executive branch's negotiating strategy, this statement actually circumvents the key constraints of the War Powers Resolution.
According to the bill, the president has 60 days to deploy troops without congressional approval. The statutory time limit was reached on May 1, starting from March 2, when the United States officially notified the military strike against Iraq.
It is worth noting that Johnson's statement contains obvious legal ambiguity. Even though there is currently a ceasefire, the bill clearly stipulates that "if military action against Iran continues in the future, it will be considered a continuation of the war and trigger the time limit clause." The White House and congressional Republicans are trying to circumvent the authorization obligation by using the "non-war state" as an excuse, but this interpretation has been questioned by Democratic lawmakers. If military action escalates in the future, it may trigger constitutional disputes and bring additional uncertainty to the market.
In summary, negotiations remain the best solution for both the US and Iran. Although progress in nuclear negotiations has been hampered, ending the conflict and restoring passage through the Strait of Hormuz have become consensus goals. Ultimately, military deterrence will still serve as a bargaining chip in the negotiation process.
Regardless of the outcome of the negotiations, the risks of passage through the Strait of Hormuz will continue to surface – current ship traffic through the strait has decreased by 95.3% compared to before the conflict, about one-fifth of the world's oil and gas supply is disrupted, and the restoration of the shipping chain will be a long process.
Coupled with the continued decline in global crude oil inventories predicted by institutions such as the EIA and OPEC, global crude oil inventories are expected to decrease by an average of 145,900 barrels per day in 2025. The tightening supply will provide strong support for oil prices. Even if there is a short-term pullback due to negotiation expectations, the long-term upward logic remains solid. The World Bank predicts that the average price of Brent crude oil may rise to $86 per barrel in 2026, and may reach $115 per barrel in extreme scenarios.
In the gold market, although prices fluctuate in the short term due to the rebound in risk appetite triggered by Iran's new proposal, geopolitical risk premiums will continue to support safe-haven demand.
The World Gold Council has made it clear that current gold price fluctuations have not changed gold's core safe-haven attribute. Global central bank gold purchases remain above the five-year average, and gold bar and coin investments have increased by 42% year-on-year, highlighting gold's liquidity advantage during periods of extreme volatility.
If US-Iran negotiations break down, military conflict escalates, or political uncertainty intensifies due to the War Powers Resolution, gold will once again become a safe haven for funds. Even if negotiations make progress, global inflationary pressures and central bank gold purchases will provide a floor for gold prices.
Crude oil: The core driver comes from supply-side constraints. The risk of passage through the Strait of Hormuz and the continued reduction of global inventories form the basis for long-term price increases, while short-term fluctuations are affected by the progress of negotiations and the strength of military deterrence.
Iran's oil storage facilities are nearing capacity, and the US blockade has trapped 41 oil tankers (estimated at $6 billion). If the blockade continues, Iran may be forced to reduce production, further exacerbating supply shortages.
Gold: Geopolitical uncertainty is the core support, with the progress of the US-Iran conflict, the US constitutional controversy, and global inflationary pressures constituting the three major driving logics.
Despite short-term fluctuations in risk appetite, gold's long-term role as a "crisis hedging tool" remains solid, and any escalation of the situation will trigger safe-haven buying.
Latest news indicates that Iran has submitted a new proposal through Pakistan, focusing on ending the current conflict rather than advancing nuclear negotiations. This signal has directly triggered a rebound in market risk appetite.
As a result, international oil prices weakened in the short term, the US dollar index retreated slightly, and investors temporarily shifted from safe-haven assets to risk assets.
It is worth noting that Iran's proposal included a three-step framework: first, opening the Strait of Hormuz; then, the US lifting the maritime blockade; and finally, postponing nuclear negotiations. However, this proposal has been explicitly rejected by US President Trump, who emphasized that the blockade will continue until Iran makes concessions on the nuclear issue. This means that even though it is difficult for the negotiations to make any real progress, the market still interprets it optimistically. Why is that?
The US uses military pressure as a bargaining chip; deterrence outweighs actual combat.
Despite a recovery in market risk appetite, the military pressure exerted by the United States and Israel has not stopped, but rather escalated.
The U.S. Central Command has drafted a plan for a “short and intense” airstrike against Iran, targeting Iranian infrastructure. Another option is to use ground forces to seize partial control of the Strait of Hormuz.
Israel has been making frequent moves, with Defense Minister Katz stating that "military operations against Iran may resume soon." In the past day alone, an additional 6,500 tons of military equipment, including aviation munitions, have arrived, bringing the total amount of military equipment received since February 28 to over 115,600 tons. The scale of procurement and transportation is expected to continue to expand.
Logically speaking, these high-profile military threats are more likely bargaining chips than a prelude to actual combat. If the US and Israel truly intend to start a war immediately, they would not need to disclose their military plans and equipment transport status in advance. Their core objective is to exert maximum pressure on Iran to force it to make greater concessions on key issues such as the opening of the Strait of Hormuz and its nuclear program.
According to Iran International, two sources familiar with the matter revealed that Iranian President Pezechzian and Iranian Parliament Speaker Ghalibaf are dissatisfied with the way Iranian Foreign Minister Araghchi conducts diplomatic work, especially in nuclear negotiations. They called for Araghchi's dismissal. This news echoes the US claim that there is no consensus within Iran, and in fact, it provides a way for the US to continue the ceasefire.
However, at the same time, the UAE issued travel bans against Iran, Lebanon, and Iraq, urging its citizens to leave the country as soon as possible. While this highlights the regional tensions, these details also made optimistic bulls in the market hesitant to take further risks.
Congress's statement carries hidden legal risks; the 60-day deadline becomes an invisible red line.
The latest remarks by U.S. House Speaker Boris Johnson have become the focus of market attention. As a key figure in the Republican Party, Johnson explicitly stated that "the United States is not at war" and that Congress does not need to interfere in the Trump administration's actions against Iran. While seemingly supporting the executive branch's negotiating strategy, this statement actually circumvents the key constraints of the War Powers Resolution.
According to the bill, the president has 60 days to deploy troops without congressional approval. The statutory time limit was reached on May 1, starting from March 2, when the United States officially notified the military strike against Iraq.
It is worth noting that Johnson's statement contains obvious legal ambiguity. Even though there is currently a ceasefire, the bill clearly stipulates that "if military action against Iran continues in the future, it will be considered a continuation of the war and trigger the time limit clause." The White House and congressional Republicans are trying to circumvent the authorization obligation by using the "non-war state" as an excuse, but this interpretation has been questioned by Democratic lawmakers. If military action escalates in the future, it may trigger constitutional disputes and bring additional uncertainty to the market.
Market Outlook: Negotiations remain the main theme; crude oil prices have a solid foundation for further gains; gold's safe-haven appeal remains unchanged.
In summary, negotiations remain the best solution for both the US and Iran. Although progress in nuclear negotiations has been hampered, ending the conflict and restoring passage through the Strait of Hormuz have become consensus goals. Ultimately, military deterrence will still serve as a bargaining chip in the negotiation process.
Regardless of the outcome of the negotiations, the risks of passage through the Strait of Hormuz will continue to surface – current ship traffic through the strait has decreased by 95.3% compared to before the conflict, about one-fifth of the world's oil and gas supply is disrupted, and the restoration of the shipping chain will be a long process.
Coupled with the continued decline in global crude oil inventories predicted by institutions such as the EIA and OPEC, global crude oil inventories are expected to decrease by an average of 145,900 barrels per day in 2025. The tightening supply will provide strong support for oil prices. Even if there is a short-term pullback due to negotiation expectations, the long-term upward logic remains solid. The World Bank predicts that the average price of Brent crude oil may rise to $86 per barrel in 2026, and may reach $115 per barrel in extreme scenarios.
In the gold market, although prices fluctuate in the short term due to the rebound in risk appetite triggered by Iran's new proposal, geopolitical risk premiums will continue to support safe-haven demand.
The World Gold Council has made it clear that current gold price fluctuations have not changed gold's core safe-haven attribute. Global central bank gold purchases remain above the five-year average, and gold bar and coin investments have increased by 42% year-on-year, highlighting gold's liquidity advantage during periods of extreme volatility.
If US-Iran negotiations break down, military conflict escalates, or political uncertainty intensifies due to the War Powers Resolution, gold will once again become a safe haven for funds. Even if negotiations make progress, global inflationary pressures and central bank gold purchases will provide a floor for gold prices.
Summary of key driving factors for crude oil and gold
Crude oil: The core driver comes from supply-side constraints. The risk of passage through the Strait of Hormuz and the continued reduction of global inventories form the basis for long-term price increases, while short-term fluctuations are affected by the progress of negotiations and the strength of military deterrence.
Iran's oil storage facilities are nearing capacity, and the US blockade has trapped 41 oil tankers (estimated at $6 billion). If the blockade continues, Iran may be forced to reduce production, further exacerbating supply shortages.
Gold: Geopolitical uncertainty is the core support, with the progress of the US-Iran conflict, the US constitutional controversy, and global inflationary pressures constituting the three major driving logics.
Despite short-term fluctuations in risk appetite, gold's long-term role as a "crisis hedging tool" remains solid, and any escalation of the situation will trigger safe-haven buying.
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