Precious Metals Decline Amid Dollar Strength

Gold and silver prices faced downward pressure, with gold struggling below key levels and silver hitting two-week lows. The decline in non-yielding precious metals is attributed to a stronger US Dollar, as well as inflation concerns stemming from geopolitical conflict which raise expectations for tighter monetary policy from central banks.

Geopolitical Tensions Bolster Safe-Haven Dollar

The US Dollar Index gained ground as traders sought safe-haven assets amid persistent geopolitical uncertainty. Stalled US-Iran peace talks and the closure of the Strait of Hormuz have supported the dollar against most major currencies and contributed to a rise in West Texas Intermediate (WTI) oil prices, further fueling concerns about energy supply and global inflation.

Markets Await Key Central Bank Decisions

A cautious tone prevailed across markets as investors await monetary policy announcements from several major central banks later this week. The upcoming Federal Reserve (FOMC) meeting is a primary focus, with decisions from the Bank of England and European Central Bank also prompting traders to adopt a wait-and-see approach, leading to consolidation in many currency pairs.

Bank of Japan Holds Rates But Signals Hawkish Shift

The Bank of Japan maintained its policy rate but signaled a clear readiness to hike soon, with some analysts pointing to a potential move in June. The decision, which came despite dissent from some board members who favored an immediate hike, initially caused the Japanese Yen to strengthen against its peers before paring some gains.