Gold Pressured by US Inflation Data

Gold prices extended their decline to an 11-week low as May's U.S. consumer inflation data, which showed the largest increase in three years, did little to alter expectations for future Federal Reserve interest rate hikes. Although U.S. Treasury yields fell in response to an easing in core inflation, the headline figure reinforced the U.S. Dollar's strength and weighed on the non-yielding precious metal.

Resilient US Dollar Weighs on Global Currencies

The U.S. Dollar showed resilience following the inflation report, with analysts noting its broader uptrend remains intact due to persistent inflation and a strong labor market. This underlying strength exerted pressure on other major currencies, notably pushing the Japanese Yen to fresh lows against the dollar as markets continued to price in policy divergence.

Divergent Global Central Bank Policies

Central banks outside the United States continue to navigate distinct economic landscapes, leading to varied monetary policy outlooks. The Bank of Canada held its key interest rate steady, seeing few signs of broad-based inflation from energy prices, while stronger-than-expected inflation in Norway has increased expectations for a rate hike from the Norges Bank.

Oil Markets Monitor Geopolitical Tensions

Oil markets displayed a limited initial reaction to renewed military exchanges between the U.S. and Iran, with Brent crude trading near recent lows. Prices for West Texas Intermediate (WTI) later saw a modest bounce amid warnings of potential further military action, highlighting geopolitical risk as a background factor for financial markets.