Gold Declines Despite Increased Safe-Haven Demand
Gold ( XAU/USD ) traded near $3,360 on Monday amid heightened volatility as investors reacted to the intensifying conflict in the Middle East.
Over the weekend, US forces targeted three of Iran’s primary nuclear facilities, prompting US President Donald Trump to issue a stern warning of further military action unless Tehran agrees to peace terms. The deepening hostility between Israel and Iran has fuelled a strong rally in gold, which has surged by nearly 30% year-to-date, as geopolitical risks continue to mount.
Markets will also be watching several key economic events this week. Federal Reserve (Fed) officials are scheduled to speak throughout the week, with Fed Chair Jerome Powell due to testify before Congress. His comments are likely to address the economic fallout from recent US tariffs and the broader implications of the Iran conflict. In addition, investors await key US data— core inflation , weekly jobless claims , and PMI figures—for further insight into the Fed’s monetary policy outlook.
XAU/USD fell during the Asian and early European trading sessions. Today, the market should focus on the S&P Composite Purchasing Managers’ Index data at 1:45 p.m. UTC. A higher-than-expected number will put downward pressure on XAU/USD, while lower-than-anticipated figures suggest a bullish outlook for gold. Key levels to watch are support at $3,340 and resistance at $3,400.
Euro Falls as Middle East Tensions Escalate
The euro ( EUR/USD ) declined towards 1.14600 on Monday as heightened geopolitical tensions drove investors toward safe-haven assets.
The drop followed US airstrikes on three Iranian nuclear facilities over the weekend—a move that surprised markets. Just days earlier, US President Donald Trump stated that a decision on Iran would be made ’within the next two weeks’, bolstering hopes of a diplomatic resolution.
As tensions escalate, investors remain on edge, closely watching Tehran’s potential response. Concerns are mounting over the possibility of retaliatory attacks on US personnel in the Middle East or disruptions to global oil supplies via the Strait of Hormuz. These risks have increased market volatility and strengthened the US dollar as investors seek shelter in dollar-denominated assets.
EUR/USD fell during the Asian and early European trading sessions. Today, S&P Global Market Intelligence will release its highly anticipated Purchasing Managers’ Indices (PMIs). PMIs will be published for several major economies: Germany, France, the US, and the eurozone. If European PMIs are weaker than expected, EUR/USD could break below 1.14600 and head lower. Conversely, better-than-expected results may trigger a rebound towards 1.15400.
Australian Dollar Falls Towards Four-week Low
The Australian dollar ( AUD/USD ) slipped below 0.64300 on Monday—the lowest level in four weeks—as investors flocked to the US dollar (USD) amid rising geopolitical tensions.
The greenback strengthened on safe-haven demand following US airstrikes on Iranian nuclear facilities over the weekend. US President Donald Trump warned that military action would continue if Tehran failed to agree on peaceful terms. This stance heightened market anxiety amid growing risks of further escalation.
Despite external headwinds, the Australian economy showed signs of resilience. Preliminary June data revealed that private sector activity expanded for a ninth consecutive month, with the composite Purchasing Managers’ Index (PMI) climbing to 51.2 from 50.5 in May. This marked the second-fastest growth rate in the past 10 months, signalling steady momentum in both the manufacturing and services sectors.
AUD/USD maintained its downward momentum during Asian and early European trading sessions. The manufacturing PMI remained stable at 51, while the services PMI improved towards a three-month high of 51.3, up from 50.6 in the previous month. These figures suggest domestic demand and business activity are holding up well, even as global uncertainties weigh on investor sentiment and the local currency. Key technical levels to watch are resistance at 0.64500 and support at 0.64000.