Geopolitical De-escalation Hopes Weigh on Oil

Growing optimism around diplomatic efforts between the United States and Iran has eased geopolitical tensions, weighing on safe-haven linked assets. Comments from the US President downplaying the need for further military strikes contributed to a significant decline in crude oil prices. This de-escalation in the Middle East reduced the risk premium in commodity markets, impacting commodity-linked currencies like the Canadian Dollar.

Precious Metals Pressured by Fed Outlook

Gold prices declined below $4,150 as expectations for further US interest rate hikes overshadowed the geopolitical developments. The prospect of tighter monetary policy, bolstered by a recent strong jobs report, put pressure on the non-yielding metal. The retreat in oil prices also eased some inflation concerns, reducing demand for gold as an inflation hedge, while silver pulled back from highs above $53.00 amid renewed US Dollar buying.

Markets Await Key US Inflation Data

Financial markets exhibited a cautious tone as traders await the release of key US Consumer Price Index (CPI) data. The US Dollar Index consolidated, with major currency pairs holding in tight ranges ahead of the inflation figures that will heavily influence the Federal Reserve's future policy path. Meanwhile, new data from China showed a larger-than-expected contraction in its trade surplus, which weighed on the Australian Dollar and added to the watchful mood.