Geopolitical Tensions Drive Oil Prices Higher

Escalating tensions in the Middle East are weighing on market sentiment, following warnings from the US Secretary of State about potential military attacks on Iran and reports of Houthi strikes on ships in the Red Sea. These developments have heightened concerns over energy supply, contributing to a multi-day rally that has pushed West Texas Intermediate (WTI) crude oil futures toward $90 per barrel. The risk-off mood was also reflected in US equity futures, which declined during the session.

Gold Reverses Gains as Dollar Strengthens

Gold prices saw a volatile session, initially rallying on dip-buying and technical support before reversing course and falling below $4,100 an ounce. The pullback from a two-week high was driven by a stronger US Dollar, which attracted its own safe-haven demand amid the geopolitical turmoil. Rising US Treasury yields, reflecting persistent expectations for central bank rate hikes, also created headwinds for the non-yielding precious metal.

Hawkish Outlook for Global Central Banks

Expectations for tighter monetary policy are solidifying globally, with analysts pointing to inflationary pressures from the energy price shock. Multiple reports indicate the European Central Bank is likely to maintain a hawkish stance and proceed with a rate hike in September. Similarly, strong employment data from Australia has kept the probability of a rate increase from the Reserve Bank of Australia elevated.

Silver Prices Decline

In contrast to gold's earlier strength, silver prices fell on Thursday, recording a loss of over 1.5% for the session. The metal's price dropped from nearly $60 to trade below $59 per troy ounce.