The conflict between the United States and Iran has entered its eighth week, with no sign of the anticipated second round of peace talks, and indications suggest tensions may be escalating again.

Uncertain geopolitical developments are expected to continue driving market movements this week. Concurrently, U.S. corporate earnings reports, including Tesla's, and key economic data will introduce additional variables.

**Geopolitical Tensions Escalate? Crude Opens Higher, Gold Dips Briefly** The conflict does not appear to be "nearing its end" as anticipated by former President Trump. Over the past weekend, the Strait of Hormuz was closed again after a brief reopening. Iran has refused ceasefire talks, citing the U.S. blockade, while the U.S. seized an Iranian cargo ship, prompting vows of retaliation from Tehran.

The initially proposed two-week ceasefire period is set to expire this Wednesday, April 22. So far, no further talks have been scheduled, and significant disagreements remain on critical issues such as the strategic strait and uranium enrichment. Given a severe lack of mutual trust, any temporary ceasefire or even a permanent agreement between the two sides remains fragile. For Iran, control over the Strait of Hormuz continues to be a crucial bargaining chip.

Market movements reversed at Monday's open, with crude oil prices rising again, supporting a continued rebound in the U.S. dollar. Gold fell by over 1% briefly, while U.S. stock index futures edged lower. However, these reactions were less extreme compared to those seen at the onset of the conflict, suggesting investors are still betting on diplomatic efforts and a potential de-escalation.

**Tesla Leads Tech Earnings as U.S. Stocks Hit New Highs** This week, 20% of S&P 500 components are scheduled to report earnings, including major tech firms like Tesla and IBM on Wednesday, and Intel on Thursday. This flurry of tech earnings comes just as the S&P 500 and Nasdaq Composite indices reached consecutive record highs last week. The Nasdaq recorded 13 straight days of gains, its longest winning streak since 1992.

This rapid recovery is attributed partly to geopolitical developments and partly to optimistic corporate earnings expectations. Wall Street forecasts S&P 500 first-quarter earnings to grow approximately 14% year-over-year, significantly higher than the 4.2% growth projected for Europe. Data indicates that during the Nasdaq's 13-day rally, capital rapidly shifted from European and Asia-Pacific markets back into U.S. equities.

Therefore, for U.S. stocks, aside from technical correction pressures, the two primary drivers of the recent rally—peace talks and corporate profits—will be put to the test this week.

**Federal Reserve Chair Nomination Hearing** Kevin Wash, the nominee for the next Federal Reserve Chair, will attend a confirmation hearing before the Senate. If confirmed, he is expected to succeed Jerome Powell in mid-May, although Powell's term as a Governor extends until January 2028.

The new Chair would face significant challenges in implementing proposed interest rate cuts. Due to soaring energy prices, interest rate market data suggests only about a 30% probability of a rate cut by year-end. In contrast, other major central banks are more likely to raise rates this year, presenting a potential headwind for the U.S. dollar.

**Economic Data** Recent economic data has begun to more fully reflect the impact of the conflict, although its effect on markets remains limited.

U.S. March Retail Sales month-over-month, due Tuesday, are forecast to jump to 1.4% from 0.6%. UK March CPI, released Wednesday, is expected to rise to 3.3% from 3.0%. Japan's Core CPI, out Friday, is projected to increase to 1.8% from 1.6%.

**XAUUSD Gold 4-Hour Chart** According to the chart, gold gave up gains late Friday and dipped to $4,736 at Monday's open. However, no significant sell-off materialized, with the hourly chart showing a recovery from the dip, indicated by a long lower shadow. This suggests bulls currently hold a relative advantage after three consecutive weeks of gains.

The $4,765/$4,785 zone remains a key pivot area. Holding above this level keeps the potential for a continued upward trend alive, although weakened momentum warrants attention to resistance near $4,880 and the possibility of continued consolidation. A break below the pivot zone could see a test of the $4,600/$4,650 area.

Gold's one-week implied volatility has decreased to 27% from 32% last week, implying a high probability that prices will fluctuate between $4,646.55 and $5,012.07 this week—a range of approximately $182 above and below last Friday's closing price.