The international investment landscape has seen notable shifts recently as concerns over the Middle Eastern conflict have eased, leading to a decrease in the appetite for safe-haven assets such as gold, oil, and bondsInvestors have begun redirecting their focus towards higher-risk securities, which has placed downward pressure on these commodities.

The fluctuations in the global market have been significantly influenced by the performance of the U.Sdollar, which has shown resilience, maintaining position above the crucial 106 markInvestors are closely monitoring geopolitical developments while also considering the resurgence of inflation and the anticipated prospect of the Federal Reserve cutting interest rates later this year.

In the face of geopolitical tensions, the attitude towards gold has shifted dramaticallyWith no immediate threat of escalation in conflicts, there has been a renewed interest in riskier assets like equities

This change was starkly evident last Monday when gold prices plummeted nearly 3%, falling below the $2,350 threshold and marking the largest single-day drop since February of the previous year.

Market analysts like Marios Hadjikyriacos, a senior investment analyst at XM, interpret this trend as a cautious retreat from the idea of military conflictHe notes that both Israel and Iran exhibit a clear disinterest in entering full-scale war, a sentiment echoed by the United States, which has played a mediating role behind the scenesAs a result, investors are increasingly entering riskier trades while unwinding hedges in hopes that the situation stabilizes.

Jake Hanley, Managing Director and Senior Portfolio Strategist at Teucrium, adds that despite a strong year thus far with gold prices climbing nearly 15%, the inability to break through the $2,400 mark has prompted some investors to capitalize on profits

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This price level has become a psychological barrier, and its persistence has consequences for investor behavior.

Looking ahead, monetary policy expectations are poised to become a significant anchor for gold pricesAccording to Adrian Ash, Director of Research at Bullion Vault, the primary challenge for gold remains the Federal Reserve and U.STreasury yieldsAs the likelihood of the Fed starting to cut rates diminishes, the costs for speculative bullish positions have dramatically increased.

This week, market participants are eagerly awaiting the release of the U.SPersonal Consumption Expenditures (PCE) report on Friday, as it may provide crucial insights on the Fed's approach to interest rates going forwardNotably, Austan Goolsbee, the president of the Chicago Fed, recently indicated that progress in combating inflation had “stalled,” signaling a more hawkish stance among policymakers.

The bearish trend in gold is becoming increasingly pronounced, with reports indicating that the extent of the decline hinges greatly on fiscal and economic indicators

Daniel Ghali, a commodity strategist at TD Securities, highlighted that if the PCE report suggests a more than expected cooling of inflation, gold may revisit its historical highsHe emphasized that purchases in Asia are likely to remain robust, as gold is still perceived in the region as a safeguard against currency appreciation.

Hanley’s insights also suggest that persistent inflation risks would require restrictive monetary policies to last longer, which could ultimately pose considerable headwinds for gold, as high interest rates typically lead to increased investment allure in the dollarWith the potential for gold to test the critical technical support levels around $2,300, he warns that should this level break, prices may further decline to as low as $2,200.

In the oil market, a similar dynamic is unfoldingPrices have begun to recalibrate themselves after a two-week downward trajectory amid a backdrop of geopolitical unease

Despite Israel's retaliatory strikes against Iran, the spike in prices was short-lived, with values retracting fully by the close of trading that day.

Tamas Varga, a senior market analyst at PVM Oil Associates, noted in an interview that the market is gradually digesting the so-called “war premium” that had previously elevated pricesTo date, Israel has largely adhered to the international call for restraint, allowing anxieties regarding the broader conflict to dissipate.

Phil Flynn, a senior analyst at Price Futures Group, echoed these sentiments, remarking that both Israel and Iran appear to suggest that the cycle of tit-for-tat responses has run its courseGiven the ongoing rise in gasoline prices alongside consumer complaints about inflation, any severe punitive actions from the U.Sseem unlikely.

Additionally, Vortexa, a data analytics firm, reported that Iran has maintained a robust output, selling an average of 1.56 million barrels per day in the first quarter of this year—the highest level since the third quarter of 2018. Despite attempts by the U.S

to impact Iran's oil exports through targeted sanctions, the tangible effects have been minimal, with Iran’s fleet for transporting oil growing significantlyEssentially, over the past year, the number of vessels used for transporting Iranian oil has increased by 20%, reaching a total of 253.

Energy expert Anas Alhajji remarked that while geopolitical tensions in the region have not severely impacted the underlying fundamentals of the oil market, there remains ongoing apprehension about the potential closure of the Strait of Hormuz by Iran—an essential maritime corridor for global oil transportHowever, such a closure would counter Iran’s own interests, making it an improbable scenario.

As the fundamentals soften, Varga noted that demand recovery has not shown sustained improvement, with spread reductions continuing for WTI and Brent crude futures contracts since April