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Michel Salibi, Chief Market Analyst at FXPro, predicted a significant rise in oil prices at the opening of this week's trading, amid renewed tensions between the United States and Iran, suggesting that Brent crude could rise by between 4% and 5% if no developments that calm the situation occur before trading begins.

He said, in an interview with Al Arabiya Business, that markets had previously responded strongly to US President Donald Trump's statements regarding the end of the agreement memorandum with Iran, despite the absence of field steps at the time, noting that any actual escalation this time would have direct repercussions on oil prices and other asset classes.

He explained that rising oil prices would lead to increased inflationary pressures, which would push investors to reprice their expectations for US monetary policy, with the possibility of a rise in US Treasury yields, especially two-year bonds, which more clearly reflect market expectations for Federal Reserve moves.

He added that markets might shift from pricing in one interest rate hike to expectations of two rate hikes before the end of the year if oil prices continue to rise, which would support the US dollar and increase pressure on interest rate-sensitive assets.

Salibi considered that the biggest risk facing gold is not inflation itself, but rather the rise in US bond yields, as continued high yields reinforce expectations of a more stringent monetary policy, which reduces gold's attractiveness.

He noted that current gold prices already reflect the possibility of a single rate hike, but continued geopolitical escalation and the return of inflationary pressures could push gold to test levels below $3,900 before resuming its trajectory.

Regarding his investment strategy until the end of the year, Salibi explained that he prefers to allocate about 40% to 45% of the portfolio to US Treasury bonds or related ETFs, benefiting from the rise in yields.

He added that he prefers to reduce his exposure to technology stocks, expecting that the results of the second and third quarters may contain some data that could push the sector to price corrections, while he continues to adopt a positive outlook on gold in the long term, considering that any decline towards $3,600 to $3,700 will represent a good opportunity to increase investment positions.

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