Precious Metals Decline Amid Hawkish Fed Outlook

Gold and silver prices fell sharply as expectations for a more aggressive Federal Reserve policy weighed on the non-yielding assets. Silver dropped below the $65 per ounce level, while gold extended its decline to trade below $4,400, pressured by surging U.S. Treasury yields and increased market bets on future interest rate hikes. This marked a significant reversal from the multi-month highs seen last week.

U.S. Dollar Strengthens on Rate Hike Expectations

The U.S. Dollar Index gained positive traction as traders continued to price in the potential for further monetary tightening from the Federal Reserve. Hawkish sentiment following the recent Jackson Hole symposium kept the probability of a September rate hike elevated, lending support to the dollar against its major peers. Investors are now looking ahead to key U.S. economic data, including the ISM Manufacturing PMI and JOLTS Job Openings, for further clues on the economy's strength.

Rising Oil Prices and Geopolitical Risks Fuel Inflation Fears

Crude oil prices surged amid rising geopolitical tensions in the Middle East, including reports of incidents involving oil tankers, which threaten global supply. The rally in both Brent and WTI benchmarks contributed to broader inflation concerns in the market and was cited as a factor weighing on U.S. equity futures. The dynamic underscores the market's sensitivity to supply risks linked to ongoing tensions between the U.S. and Iran.

Global Inflation Data Shapes Central Bank Policies

Inflation in the Eurozone rose to 3.3% year-over-year in August, driven by energy costs and cementing expectations for another rate hike from the European Central Bank. Elsewhere, data showed Polish inflation surprising to the upside, while India's resilient GDP growth and domestic demand are seen underpinning a path for further tightening by the Reserve Bank of India. Despite the inflationary pressures, the Euro remained subdued against several currency pairs following the data release.