The dollar index (DXY) reached a 10.5-month high on Monday, closing up 0.40%, amid safe-haven demand due to ongoing concerns about an escalated conflict in Iran. President Trump indicated the possibility of U.S. military action to seize Iranian oil, specifically targeting Kharg Island. However, a decline in T-note yields limited the dollar’s gains, which were further tempered by data showing a decrease in the Dallas Fed manufacturing activity survey, falling from -0.4 to -0.2, against expectations of a rise to 2.0.
In the Eurozone, the economic sentiment index dropped to a six-month low of 96.6 in March, below the expected 96.7, while German CPI rose 1.2% month-over-month and 2.8% year-over-year, marking the largest annual increase in two years. The euro fell 0.45% against the dollar, pressured by the strong dollar and rising crude oil prices. Meanwhile, the Bank of Japan sees an 82% chance of a rate hike at its next meeting on April 28, with officials expressing concerns over currency speculation.
Gold prices rose $33.50 (0.75%), and silver gained $0.773 (1.11%) amid increased safe-haven demand related to the ongoing Iran conflict. Despite these gains, precious metal holdings in ETFs have recently dropped, with gold hitting a 3.5-month low and silver reaching a 6.25-month low due to fund liquidation. Central bank gold purchases, notably from China, continue to support gold prices, with reserves rising by 40,000 ounces to 74.19 million troy ounces in January.
