Geopolitical Tensions Bolster US Dollar

The US Dollar strengthened broadly against a basket of major currencies as the rejection of a peace proposal between the US and Iran increased geopolitical uncertainty. The dollar's safe-haven appeal drove it higher against the Euro, British Pound, and Japanese Yen, with the US Dollar Index (DXY) registering gains. This overarching theme of dollar strength weighed on other currencies, including the Australian and New Zealand dollars.

Gold and Silver Prices Diverge

Gold prices slumped as reports linked the downturn to inflation fears fanned by the rejection of the Iran peace deal. However, underlying physical demand for gold appears robust, with Chinese buying through Hong Kong-based Exchange-Traded Funds (ETFs) continuing at a record pace. In contrast to gold, silver prices rallied sharply, with the move attributed to strong and rising industrial demand for the metal.

Oil Rises Amid Wider Inflation Concerns

Crude oil prices advanced as the escalation in Middle East tensions raised concerns over potential supply disruptions from the region. The move in energy markets unfolded against a backdrop of broader market focus on inflation. Recent data showed a rise in China's Consumer Price Index (CPI), while the Bank for International Settlements (BIS) urged governments to use targeted fiscal policy to manage inflation risks.