The prospects for peace talks have changed again! The US and Iran have clashed again, causing a sharp rise in oil prices, while US bonds and gold have fallen.

Due to the conflict between the United States and Iran, which could disrupt peace talks and lead to persistent inflation risks, coupled with a strong dollar putting pressure on the precious metal, gold prices have dropped to the lowest point in two months. On May 28, gold prices fell by 2% to nearly $4,365 per ounce. A U.S. official stated that the U.S. military has launched attacks on military bases and other targets near the Strait of Hormuz. According to Iranian media reports, the Islamic Revolutionary Guard Corps responded by attacking the U.S. military base that launched the attacks. Furthermore, the Kuwaiti air defense department stated that they are dealing with missile and drone threats, emphasizing the risks that negotiations to end the Middle East conflict are facing. Just hours after U.S. President Trump expressed dissatisfaction with negotiations with Iran, these events occurred, leading to disappointment in expectations of an impending breakthrough. Trump did not indicate what actions the U.S. would take to ensure the free passage of ships through the Strait of Hormuz, a crucial point in resolving the conflict with Iran. This vital energy passage has remained almost entirely closed, causing oil prices to soar and dealing a heavy blow to the global economy since late February. The U.S. has also implemented new sanctions to prevent Tehran from profiting from ships passing through the Strait of Hormuz, highlighting the fragility of recent diplomatic progress between the two sides. In recent days, as markets hoped for a deal to end the conflict, U.S. bond prices rose. Brent crude oil prices surged by 4.2% to nearly $98 per barrel on Thursday, exacerbating inflation risks and raising expectations of Fed rate hikes. Even if a peace agreement is reached, rising energy prices may continue to drive inflation higher, forcing major central banks to maintain high interest rates for an extended period, rather than cutting rates as many had expected before the Iran conflict. In this environment, U.S. bond prices fell for the first time in six trading days. During the Asia trading session on Thursday, the yield on the U.S. 10-year Treasury bond rose by 5 basis points to 4.53%, after falling by nearly 20 basis points over the previous five trading days. The yield on the 2-year U.S. Treasury bond rose by 4 basis points to 4.07%. Ken Crompton, Head of Rate Strategy at National Australia Bank Limited, stated that reports of Iran attacking U.S. military facilities were likely the main driver of this trend. He said, "This has somewhat dampened demand in the stock market and raised oil prices and bond yields. We remain generally bearish on long-term bonds: many markets are facing fiscal pressures, the risk of inflation expectations losing anchor after five years of inflation above target, and the Federal Open Market Committee (FOMC) leaning more towards rate hikes." Concerns about rising oil prices on Thursday also put pressure on government bonds in the Asia-Pacific markets. The yield on Australian 10-year government bonds rose by 6 basis points, while New Zealand's 10-year government bond yield rose by 2 basis points. Japan's 10-year government bond yield rose slightly by 0.5 basis points. Fed board member Lael Brainard stated on Wednesday that inflation is moving in the wrong direction, and she is prepared to raise rates if this trend continues. Fed Vice Chair Richard Clarida also warned that inflation risks remain skewed to the upside, and he is closely watching whether the increase in energy costs due to the Iran conflict will dampen consumer spending. Overnight index swaps indicate a 70% likelihood of Fed rate hikes by the end of 2026. In a high-interest rate environment, precious metals typically perform poorly because they do not pay interest; and a strong dollar makes precious metals more expensive for many buyers. Since the end of February when the Iran conflict erupted, precious metal prices have fallen by over 17%, wiping out gains made since the beginning of the year. Options market signals show that traders are retracting their bullish outlook on gold prices and anticipate reduced market volatility in the future. As the world's largest gold ETF, SPDR Gold Trust under State Street Bank has seen a significant drop in implied volatility (an indicator of expected price trends in the future). Additionally, speculative or hedge premiums on price increases for this fund in the next three months are close to their lowest levels since December last year. Justin Lin, Investment Strategist at Global X ETFs Australia, stated, "Traders are losing confidence in safe-haven demand, finding better uses for their funds," such as investing in some high-profile listed companies. He added that if oil prices rise, gold prices may find support in the range of $4,000 to $4,250. At the time of writing, spot gold fell by 1.8% to $4,374.11 per ounce. Silver fell by 3.6% to $71.98 per ounce. Platinum and palladium prices also experienced declines. The Bloomberg Dollar Spot Index rose by 0.3%, marking the third consecutive trading day of gains.