The U.S. dollar rose against other major currencies during thin trading late Sunday, as investors pivoted toward the American currency as a relatively safe haven, following the failure of prolonged talks between Washington and Tehran to reach a peace agreement, plunging markets into a seventh week of uncertainty.

U.S. President Donald Trump said on Sunday that the U.S. Navy would begin imposing a blockade on the Strait of Hormuz, a vital corridor for about 20% of the world's daily energy supplies, which Iran has effectively closed to traffic since the outbreak of war in late February. This has led to a jump in oil prices of more than 30%, increasing concerns about a broad wave of inflation.

The dollar, which is viewed as a safe haven due to the low exposure of the United States to imported energy price inflation, rose as Asian markets opened, pushing the euro down by 0.53% to $1.1663, while the dollar climbed 0.1% against the Japanese yen to reach 159.43.

The United States and Iran had announced a two-week truce on April 7, which investors initially welcomed by selling oil and redirecting some investments toward riskier assets like stocks. However, anxiety over the fragility of this agreement prompted a reversal of those investment positions later.

Fiona Cincotta, senior market analyst at City Index, said that what is happening now is a "complete dismantling of any optimism that preceded the peace talks, and a return to the scenario of the dollar as a safe haven, with oil rising and an exit from other assets."

She added that markets sometimes tend to overreact, especially in light of this significant amount of uncertainty, noting that pricing these developments still represents a major challenge for investors.

In contrast, currencies most sensitive to risk, such as the Australian dollar and the British pound, came under strong pressure, falling by 1.1% and 0.5% respectively.

As expectations of a return to rising inflation escalate, investors have priced in the probability of several central banks, such as the European Central Bank and the Bank of England, resorting to raising interest rates this year, in a sharp shift compared to previous expectations before the outbreak of the war, which indicated stable or even lower interest rates.

As for global stocks, which ended last week near their highest levels since early March supported by optimism regarding the possibility of reaching a settlement, they remain about 2% lower compared to their levels before the outbreak of the war.

At the same time, gold has lost about 10% of its value since late February, as investors prefer the dollar as the primary safe haven at the moment.

Silver prices lost nearly 4.5% in European markets on Monday to move away from three-week highs, on track to incur their first loss in the last five days, due to correction and profit-taking operations, in addition to pressure from the rise of the U.S. dollar after the collapse of peace talks between the United States and Iran in Pakistan.

With the escalation of U.S. threats to impose a naval blockade on the Strait of Hormuz and Iranian ports, global oil prices jumped by more than 10%, in a development that brings concerns of accelerating global inflation back to the forefront and increases pressure on the Federal Reserve to raise interest rates in the near term.

Price overview

• Silver prices today: Silver metal prices fell by about 4.5% to ($72.63), from the opening level of trading at ($75.93), and recorded a high of ($75.93).

• Upon price settlement on Friday, silver prices achieved an increase of 0.8%, in their fourth consecutive daily gain, near a three-week high of $77.65 per ounce, supported by the decline of the U.S. dollar.

• During the past week, silver prices achieved an increase of 4.0%, in the third consecutive weekly gain, after the announcement of the two-week truce in the Iranian war.

The U.S. Dollar

The dollar index rose on Monday at the start of the week's trading by 0.5%, beginning a broad recovery from its lowest levels in a month, reflecting the rise in the levels of the American currency against a basket of global currencies.

Aside from buying operations from low levels, U.S. dollar levels rose due to fears of renewed war in the Middle East region after the collapse of peace talks between the United States and Iran in Pakistan.

Saul Kavonic, an analyst at MST Marquee, said: The market has now largely returned to its status before the ceasefire.

Updates on the Iranian war

• The talks between the United States and Iran in Islamabad ended in a deadlock.

• Washington's insistence on a complete dismantling of what remains of uranium enrichment facilities in Iran.

• Tehran's demand for an immediate lifting of all economic sanctions before extending the truce.

• Trump says that the United States will impose a blockade on the Strait of Hormuz after the failure of peace talks with Iran.

• Trump ordered the U.S. Navy to impose a blockade on the Strait of Hormuz starting at 10:00 AM U.S. Eastern Time on Monday.

• Trump believes that Iran will continue the dialogue; Tehran seeks a "balanced and fair agreement."

• Iran warns of a harsh response to the blockade and accuses the United States of being intransigent in negotiations.

• The Wall Street Journal reported that Trump and his advisors are considering launching limited strikes on Iran.

Global oil prices

Oil prices jumped by more than 10% on Monday after the failure of U.S.-Iranian talks to reach an agreement, leaving the fragile ceasefire hanging and continuing to choke energy exports from the Middle East.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may push global central banks, especially the Federal Reserve, to raise interest rates in the near term, in a sharp shift from pre-war expectations of cutting or fixing U.S. interest rates for a long period.

U.S. interest rates

• After the rise in oil prices and according to the "FedWatch" tool of the CME Group: pricing of the probability of keeping U.S. interest rates unchanged at the April meeting declined from 99% to 96%, and pricing of the probability of raising interest rates by about 25 basis points rose from 1% to 4%.

• In order to re-price those probabilities, investors are closely following the release of more economic data from the United States.

Gold prices lost more than 2% in European markets on Monday at the start of the week's trading, continuing their losses for the second consecutive day, moving away from a three-week high, as correction and profit-taking operations continue, in addition to pressure from the rise of the U.S. dollar after the failure of peace talks between the United States and Iran in Pakistan.

With the escalation of U.S. threats to impose a naval blockade on the Strait of Hormuz and Iranian ports, global oil prices jumped by more than 10%, in a development that brings concerns of accelerating global inflation back to the forefront and increases pressure on the Federal Reserve to raise interest rates in the near term.

Price overview

• Gold prices today: Gold metal prices fell by 2.2% to ($4,644.52), from the opening level of trading at ($4,749.45), and recorded a high of ($4,749.45).

• Upon price settlement on Friday, gold prices lost 0.4%, in the first loss within the last four days, due to correction and profit-taking operations from a three-week high at $4,857.56 per ounce.

• Last week, gold prices achieved an increase of 1.55%, in the second consecutive weekly gain, thanks to the decline of the U.S. dollar after the announcement of the two-week truce in the Iranian war.

The U.S. Dollar

The dollar index rose on Monday at the start of the week's trading by 0.5%, beginning a broad recovery from its lowest levels in a month, reflecting the rise in the levels of the American currency against a basket of global currencies.

As we know, the rise in the levels of the American currency makes gold bullion priced in U.S. dollars less attractive to buyers holding other currencies.

Aside from buying operations from low levels, U.S. dollar levels rose due to fears of renewed war in the Middle East region after the collapse of peace talks between the United States and Iran in Pakistan.

Saul Kavonic, an analyst at MST Marquee, said: The market has now largely returned to its status before the ceasefire.

Updates on the Iranian war

• The talks between the United States and Iran in Islamabad ended in a deadlock.

• Washington's insistence on a complete dismantling of what remains of uranium enrichment facilities in Iran.

• Tehran's demand for an immediate lifting of all economic sanctions before extending the truce.

• Trump says that the United States will impose a blockade on the Strait of Hormuz after the failure of peace talks with Iran.

• Trump ordered the U.S. Navy to impose a blockade on the Strait of Hormuz starting at 10:00 AM U.S. Eastern Time on Monday.

• Trump believes that Iran will continue the dialogue; Tehran seeks a "balanced and fair agreement."

• Iran warns of a harsh response to the blockade and accuses the United States of being intransigent in negotiations.

• The Wall Street Journal reported that Trump and his advisors are considering launching limited strikes on Iran.

Global oil prices

Oil prices jumped by more than 10% on Monday after the failure of U.S.-Iranian talks to reach an agreement, leaving the fragile ceasefire hanging and continuing to choke energy exports from the Middle East.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may push global central banks, especially the Federal Reserve, to raise interest rates in the near term, in a sharp shift from pre-war expectations of cutting or fixing U.S. interest rates for a long period.

U.S. interest rates

• After the rise in oil prices and according to the "FedWatch" tool of the CME Group: pricing of the probability of keeping U.S. interest rates unchanged at the April meeting declined from 99% to 96%, and pricing of the probability of raising interest rates by about 25 basis points rose from 1% to 4%.

• In order to re-price those probabilities, investors are closely following the release of more economic data from the United States.

Gold performance expectations

Tim Waterer, chief market analyst at KCM Trade, said: Optimism regarding the ceasefire faded after the failure of peace talks, and the resulting rise in dollar and oil prices led to gold retreating again.

Waterer added: Once oil prices exceed $100, eyes quickly turn to the possibility of central banks raising interest rates to curb inflation, and these expectations regarding interest rates are what weaken gold's performance.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained largely unchanged on Friday, leaving the total at 1,052.42 metric tons, which is the lowest level in about a week.

The euro fell in European trading on Monday against a basket of global currencies, for the first time in the last six days against the U.S. dollar, moving away from a five-week high due to correction and profit-taking operations, in addition to renewed buying of the American currency as the best alternative investment, especially after the collapse of peace talks between the United States and Iran in Pakistan.

With the escalation of U.S. threats to impose a naval blockade on the Strait of Hormuz and Iranian ports, global oil prices jumped by more than 10%, in a development that brings concerns of accelerating global inflation back to the forefront and increases pressure on central banks to take steps closer toward raising interest rates in the near term.

Price overview

- Euro exchange rate today: The euro fell against the dollar by 0.5% to ($1.1664), from Friday's closing price at ($1.1723), and recorded a high during today's trading at ($1.1690).

- The euro ended Friday's trading up by 0.2% against the dollar, in its fifth consecutive daily gain, and recorded a five-week high at $1.1740, prior to the start of peace talks between the United States and Iran.

- During the past week, the euro achieved an increase of 1.8% against the dollar, its second consecutive weekly gain and its largest weekly gain since last January, thanks to the agreement between the United States and Iran on a two-week ceasefire, which included opening the Strait of Hormuz to global navigation.

The U.S. Dollar

The dollar index rose on Monday at the start of the week's trading by 0.5%, beginning a broad recovery from its lowest levels in a month, reflecting the rise in the levels of the American currency against a basket of global currencies.

Aside from buying operations from low levels, U.S. dollar levels rose due to fears of renewed war in the Middle East region after the collapse of peace talks between the United States and Iran in Pakistan.

Saul Kavonic, an analyst at MST Marquee, said: The market has now largely returned to its status before the ceasefire.

Updates on the Iranian war

- The talks between the United States and Iran in Islamabad ended in a deadlock.

- Washington's insistence on a complete dismantling of what remains of uranium enrichment facilities in Iran.

- Tehran's demand for an immediate lifting of all economic sanctions before extending the truce.

- Trump says that the United States will impose a blockade on the Strait of Hormuz after the failure of peace talks with Iran.

- Trump ordered the U.S. Navy to impose a blockade on the Strait of Hormuz starting at 10:00 AM U.S. Eastern Time on Monday.

- Trump believes that Iran will continue the dialogue; Tehran seeks a "balanced and fair agreement."

- Iran warns of a harsh response to the blockade and accuses the United States of being intransigent in negotiations.

- The Wall Street Journal reported that Trump and his advisors are considering launching limited strikes on Iran.

Global oil prices

Oil prices jumped by more than 10% on Monday after the failure of U.S.-Iranian talks to reach an agreement, leaving the fragile ceasefire hanging and continuing to choke energy exports from the Middle East.

Undoubtedly, the rise in global oil prices renews fears of accelerating inflation, which may push global central banks, especially the European Central Bank and the Bank of England, to raise interest rates in the near term, in a sharp shift from pre-war expectations of cutting or fixing interest rates for a long period.

European interest rates

- Lagarde, President of the European Central Bank, said: The bank is ready to raise interest rates even if the expected rise in inflation is short-term.

- The money market pricing of the probabilities of the European Central Bank raising European interest rates by about 25 basis points in April is currently stable around 35%.

- Sources reported to Reuters that the European Central Bank is likely to begin discussing raising interest rates during the meeting of this month.

- In order to re-price the above probabilities, investors await the release of more economic data in the eurozone regarding the levels of inflation, unemployment, and wages.