Precious Metals Gain on Easing Inflation Cues

Gold prices rallied over 1% as a sharp decline in oil prices helped to ease market fears about inflation, improving sentiment for the non-yielding metal. Silver also posted a rebound of over 1.7%, bouncing from weekly lows amid a mixed market mood and investor rotation across different asset classes.

Federal Reserve Officials Maintain Hawkish Stance

Several Federal Reserve officials reiterated that bringing inflation back to target remains their top priority, signaling a hawkish policy outlook. Kansas City Fed President Schmid noted that inflation is the biggest risk to the economy and that further rate hikes might be needed, while San Francisco Fed President Daly also stressed the Fed's primary concern remains inflation.

Geopolitical De-escalation Weighs on Oil and the Dollar

Reports of a potential ceasefire between Israel and Lebanon led to improved market risk appetite, causing West Texas Intermediate (WTI) crude oil prices to fall nearly 3%. The easing of Middle East tensions also reduced safe-haven demand for the US Dollar, contributing to its weakness against currencies like the Euro and the British Pound.

US Dollar Shows Mixed Performance in FX Markets

The US Dollar displayed a mixed performance, losing ground to several major currencies due to improved risk sentiment but showing resilience against others. While the greenback weakened against the Euro and Pound, it saw gains against the Australian Dollar following remarks from the RBA Governor, and it remained strong against some emerging market currencies like the South Korean Won, which faced pressure from an energy shock.