The dollar index (DXY00) rose by +0.08% today, driven by heightened tensions in the Middle East after Iran announced the closure of the Strait of Hormuz for shipping, following the U.S. refusal to lift its naval blockade. In the Gulf of Oman, the U.S. Navy fired upon and boarded an Iranian-flagged cargo ship, marking the first seizure under the blockade. Amid concerns over inflation and a +5% rise in WTI crude oil prices, demand for the dollar has increased.
The UK reported that Iranian gunboats approached and fired on a tanker off Oman, while India also indicated that its ships faced gunfire. A U.S.-Iran ceasefire is set to expire on Tuesday, with uncertainty surrounding potential talks. In economic data, Germany’s March producer prices rose by +2.5% month-over-month, the largest increase in 3.5 years, while swaps markets predict only a 1% probability of a +25 bp rate hike by the Federal Open Market Committee in late April.
Gold and silver prices have fallen, influenced by dollar strength and rising crude oil prices, with June COMEX gold down -0.88% to $42.70 and May COMEX silver down -2.24% to $1.83. Long holdings in gold and silver ETFs have recently decreased, with gold holdings hitting a four-month low as of March 31. However, strong central bank demand continues, as China’s PBOC increased its gold reserves by +160,000 ounces in March.
