Middle East Tensions Escalate with US-Iran Strikes

Geopolitical tensions flared following reports of explosions in southern Iran near the Strait of Hormuz, with US officials later confirming strikes against Iranian Revolutionary Guard Corps targets. The military action, described as retaliation for an alleged Iranian attempt to mine the strait, sent crude oil prices sharply higher and prompted a sell-off in US equity markets.

Gold Prices Fall Sharply as Dollar and Yields Surge

Despite the heightened geopolitical risk, gold prices collapsed over 2% as the US Dollar strengthened and US Treasury yields rose to their highest levels since early 2025. Markets appeared to interpret the conflict as an inflationary event due to its impact on energy prices, which increased the appeal of yielding assets and the dollar over non-yielding gold.

Global Economic Policy and Trade in Focus

Discussions on international economic policy continued, with the US Treasury Secretary urging the Bank of Japan to ensure clear communication to avoid currency volatility. Separately, global trade dynamics remained a key issue, with a focus on China's trade imbalances and weak demand amid US-led restrictions and calls for protectionist measures.