Gold drops sharply as Israel-Iran tensions ease; forex impacts

Gold prices plummeted $28 (-1.2%) to $2,315 per ounce as diplomatic efforts appeared to reduce Middle East conflict risks, triggering broad risk-on sentiment across markets. The sharp decline in safe-haven demand benefited risk-sensitive currencies, with AUD/USD gaining 0.4% and NZD/USD advancing 0.35%. USD/JPY pushed higher by 0.3% to 155.20 as yen's safe-haven appeal diminished. EUR/USD remained relatively stable near 1.0780, while GBP/USD edged lower to 1.3535. The sudden shift in geopolitical risk assessment caught many traders positioned for further escalation, leading to rapid unwinding of defensive positions. Currency markets are now refocusing on fundamental drivers, particularly tomorrow's Fed decision. The gold selloff suggests reduced hedging demand, potentially signaling increased risk appetite that could support commodity currencies against safe havens in coming sessions.