The synchronicity between oil and gold dynamics that had been in place since March has been disrupted, which could increase demand for gold as a safe-haven asset.

Events over the past month, and especially the last 10 days, suggest that the drop in crude oil prices and their subsequent partial recovery are no longer being seen by market participants as a signal that the previous correlation regime — which dominated markets from March through June before the Washington–Tehran truce — will return.

The fall in prices back to pre?conflict levels, and easing inflationary pressure in the US as a result, have revived doubts that the Federal Reserve will raise interest rates not only at the upcoming meeting on July 29 but even in September.

Oil futures have not rebounded to the $100 mark yet, and the peculiar, tug-of-war nature of the current conflict seems unlikely to sustain a further commodity rally — and therefore sustained inflation. Market participants, recognizing this, are increasingly betting on the possibility that the Federal Reserve will pause and take a wait-and-see stance. Against this backdrop, the US dollar remains in consolidation, especially as markets look to the July Fed meeting for any hints about future policy — though it may be difficult to extract given Kevin Warsh's comments after the June meeting that the Fed will not be giving markets guiding signals about future policy.

Back to gold, prices of the yellow metal receive support from two main factors — a stagnant dollar and simmering negative developments from the Middle East conflict, which appear to revive gold's role as a safe?haven asset.

What to expect in markets today? I expect the broad consolidation trend to persist through the current week.

Forecast of the day

AUD/USD

The currency pair is testing resistance at 0.7025; a break above this level could push the price to 0.7070. A potential buy level is 0.7028.

GOLD

Gold is trading below 4,085.00; a move above that level could push the price toward 4,137.65. A potential buy level is 4,091.00.