The U.S. dollar jumped on Monday as soaring oil prices sent investors scrambling for cash on worries that a protracted Middle East war could severely disrupt energy supplies and hurt global growth.
The euro and sterling were left trading 0.5% and 0.6% lower against the dollar, respectively. The Aussie and even the safe-haven Swiss franc fell around 0.3% to 0.4%.
"The dollar is clearly benefitting as being relatively insulated from a lot of these Middle East risks and also picking up its usual haven trade," said Nick Rees, head of macro research at Monex Europe.
Stocks, bonds and precious metals slid on Monday as investors, spooked by the impact of surging oil prices on global inflation and economic growth, turned risk-averse and cashed in on some of their most profitable trades.
Silver prices declined by Rs 3,400 to Rs 2.68 lakh per kilogram, and gold traded almost flat at Rs 1,64,300 per 10 grams in the national capital.
"Silver extended last week's decline as a sharp rise in crude oil prices raised concerns that inflationary pressures could intensify again," Saumil Gandhi, Senior Analyst, Commodities at HDFC Securities.
Globally, spot gold fell USD 65.23, or 1.26 per cent, to trade at USD 5,105.89 per ounce, while silver was also trading 0.53 per cent lower at USD 83.92 per ounce.
"Gold is trading lower at USD 5,097 per ounce level as crude oil prices surged nearly 30 per cent overnight on Middle East supply concerns," Praveen Singh, Head of commodities and currencies at Mirae Asset ShareKhan, said.
The U.S. dollar pared some gains in the Asian afternoon on a Financial Times report that the G7 finance ministers will discuss on Monday a joint release of oil from emergency reserves coordinated by the International Energy Agency.
The report sent oil prices retreating slightly after they earlier spiked to just shy of $120 per barrel. Brent crude was last up 13% at $104.60 a barrel, after earlier surging more than 25%.
Analysts have said Asia could bear the brunt of the energy price shock, due to the region's heavy reliance on oil and gas from the Middle East, while Britain and the euro zone are also heavily exposed.
"The real question is how high and how long prices stay elevated, because that's what will ultimately determine the economic fallout," said Deepali Bhargava, regional head of research for Asia-Pacific at ING.
"A prolonged conflict, coupled with continued currency weakness, would feed more directly into inflation pressures across the region."
Higher energy prices tend to feed into broader inflation expectations, which may delay the pace of interest rate cuts by the Federal Reserve.