While regional manufacturing data from the New York Fed’s Empire State survey showed unexpected strength—rising 5 points to 20.6—the broader economic narrative remains dominated by recent soft retail sales and CPI prints. Investors currently place the probability of a September rate hike at roughly 30% to 31%. Market focus now shifts to Wednesday's release of the Fed’s July meeting minutes and upcoming flash PMI readings for further clarity on monetary policy direction.

Geopolitical tensions in the Strait of Hormuz are simultaneously exerting pressure on energy markets, with Brent crude hovering near $89 a barrel. The uncertainty surrounding tanker traffic and stalled U.S.-Iran negotiations has introduced a supply-risk premium that complicates the inflation outlook. For precious metals, this creates a tug-of-war: while a softer dollar supports bullion, any sustained spike in oil prices risks reviving inflation concerns, potentially limiting the upside for gold through the yields channel.