The Gold
In recent days, gold has once again become one of the focal points of financial markets. Its price increase has not been without reason, and a combination of economic and political factors has caused this precious metal to shine again.
One of the main drivers of this trend has been the shift in tone from Federal Reserve officials. Recent remarks by Christopher Waller, a member of the Federal Reserve Board of Governors, carried a more cautious tone than before and raised the possibility of a rate cut in July. In such circumstances, where interest rates are declining, the appeal of non yielding assets like gold increases, as holding cash or bonds is no longer as profitable, and investors seek safe and stable alternatives such as gold.
On the other hand, the weakening of the U.S. dollar has also played a significant role. Since gold is priced in dollars, a decline in the value of the dollar makes gold cheaper for foreign buyers, thereby increasing its demand. The depreciation of the dollar has been largely driven by concerns over U.S. economic growth and signs of easing inflation factors that led investors to turn to the gold market ahead of the weekend.
The rise in public confidence has also contributed to the recent increase in gold prices. Preliminary results from the University of Michigan’s consumer sentiment survey for July reached 61.8, exceeding expectations and indicating a gradual return of consumer confidence. Additionally, one year inflation expectations have decreased from 4% to 3.6%, and short term expectations have reached 4.4%. These developments could make the Federal Reserve more confident in its path toward cutting interest rates an outcome that would benefit the gold market.
At the same time, the released economic data still do not present a clear picture of the future. Although price indicators such as the CPI and PPI suggest a decline in inflation, the growth in retail sales has been mainly driven by rising prices rather than actual demand. This economic uncertainty and ambiguity traditionally enhance the appeal of gold as a safe haven for capital.
Meanwhile, political news has also had an impact on the market. Rumors about the possible dismissal of Federal Reserve Chair Jerome Powell by Donald Trump although later denied created an atmosphere of instability in the market, which benefited safe haven assets like gold. At the same time, the market is also pricing in the possibility of further interest rate cuts, a factor that once again supports gold’s position.
In the coming days, key data such as housing sector statistics, durable goods orders, and jobless claims will be released, which could shift market expectations and affect gold’s performance.
Overall, the rise in gold prices is the result of a wave of macroeconomic data and shifts. The easing of inflationary pressures, the likelihood of rate cuts, the weakening of the dollar, and the relative improvement in consumer sentiment have all worked in favor of gold. In such an environment, gold has regained its status as a safe and reliable asset and it is unlikely that this trend will end anytime soon.
The Euro
Global financial markets have encountered new developments, especially after the remarks of a key member of the U.S. Federal Reserve boosted hopes for a rate cut in July. In the meantime, fresh economic data from the U.S. as well as upcoming developments in Europe have significantly affected the currency market particularly the EUR/USD pair.
Christopher Waller, a member of the Federal Reserve Board of Governors, recently spoke in a relatively supportive tone about the idea of a rate cut in the near future, which has led to a drop in U.S. Treasury yields and a weakening of the dollar. Although Waller made no concrete promises, he emphasized that he is open to hearing different viewpoints and, if conditions are favorable, does not oppose accommodative policies. This stance was interpreted by investors as a green light for lower borrowing costs and led to increased demand for risk assets and currencies like the euro.
The market’s reaction to these developments was swift and strong. Wall Street stock indices had a positive day, and the overall market tone shifted in favor of rate cuts. However, not all Federal Reserve officials share this view. For instance, Austan Goolsbee from the Chicago Fed, citing inflationary challenges from new tariffs, warned against a premature rate cut and believes the central bank should act more patiently. This diversity of views is natural in institutions like the Federal Reserve, but Waller’s remarks drew more market attention than others.
Alongside these developments, preliminary results from the University of Michigan’s consumer sentiment survey were also released and injected a positive tone into the market. This index reached 61.8 in July, exceeding expectations and indicating a gradual recovery in consumer confidence. Additionally, one year inflation expectations dropped from 4 percent to 3.6 percent, and this decline in expectations may give the Federal Reserve more room to lower rates, as the pressure to maintain high rates is reduced.
On the other side of the story, Europe experienced a relatively calm week, but a series of key economic data releases is on the horizon, which could shift market dynamics. Reports such as the consumer confidence index, preliminary PMIs for July, and the European Central Bank’s interest rate decision are on the agenda. Within the European Central Bank itself, differing views are being voiced; some officials like Mário Centeno and Fabio Panetta have expressed concern over weak economic growth and support accommodative policies, while others like Isabel Schnabel prefer to wait for more data before making any decisions. Nevertheless, the overall tendency of the European Central Bank has tilted more toward supporting rate cuts compared to previous months.
In the week ahead, several reports will be released both in the U.S. and Europe that could influence the course of monetary policy. In the United States, data such as the state of the housing market, S&P Global PMIs, initial jobless claims, and durable goods orders will be published. This information will provide a clearer picture of inflation, employment, and the overall health of the economy, and will play a critical role in shaping market expectations.
Overall, what we are witnessing now is a delicate balance on both sides of the Atlantic. Waller’s remarks have rekindled hopes for a rate cut, and while some Federal Reserve officials remain cautious, recent data suggest that maintaining high rates may no longer be necessary. On the other hand, Europe is also on the verge of key decisions, with its central bank facing growing pressure from slowing growth. If the trend of easing inflation continues and economic confidence improves, we may eventually witness a simultaneous retreat by central banks from their tight monetary policies a development that could reshape the global financial market landscape.
The Pound
After months of economic pressure in the UK, signs of improvement in the country’s labor market are finally emerging. An upward revision of recent employment figures has allowed economists and the Bank of England (BoE) to breathe a sigh of relief. This development is highly significant, as labor market stability plays a key role in controlling inflation, shaping interest rate policies, and determining the overall economic outlook.
When the initial employment data for May were released, they painted a rather discouraging picture; the sharp decline in employment raised concerns about labor market weakness. However, now with the revised data showing a smaller than expected decrease, hopes for greater economic stability have grown. Instead of the loss of 109,000 jobs, only 25,000 were lost, presenting a vastly different picture one that has shifted from serious concern to cautious optimism.
Although this data does not mean that the problems are over, it does relieve some of the pressure on the Bank of England. If the labor market remains resilient, the central bank can more flexibly manage inflation and avoid policies that suppress economic growth.
Meanwhile, in the United States, serious debates about the future of monetary policy are also underway. Two Federal Reserve officials have differing views on interest rate cuts. Christopher Waller, a member of the Federal Reserve Board of Governors, believes that rate cuts may begin as early as this summer. Citing signs of easing inflation, he sees this as an appropriate time to reduce borrowing costs.
On the other hand, Austan Goolsbee, President of the Chicago Federal Reserve, warns that import tariffs are still exerting upward pressure on prices particularly on consumer goods. In his view, it is still too early to be certain that inflation is fully under control, and more patience is needed before cutting rates.
In the midst of all this, inflation expectations play a very important role. If people expect prices to continue rising, they typically demand higher wages and increase their spending, which in turn can fuel further inflation. However, new results from the University of Michigan’s survey show that inflation expectations are declining. According to this survey, long term inflation has dropped from 4 percent to 3.6 percent, and short term inflation has also decreased slightly. This trend may push decision makers toward lowering interest rates.
Alongside all of this, consumers sentiment are very important . The University of Michigan’s consumer confidence index rose from 60 to 61.8, indicating a slow but noticeable improvement in people’s outlook on the economic future. Although this jump is not dramatic, when people feel better about the economy, they are usually more inclined to spend. Of course, this optimism remains fragile and is still heavily dependent on keeping inflation under control.
A noteworthy point is that people will truly trust the future only when they are assured that inflation is sustainably under control a matter closely tied to stability in trade policies. If prices become predictable and global trade calms down, this trust can be strengthened.
In the coming weeks, both the UK and the U.S. will face the release of important economic data. In the UK, preliminary PMI indices and retail sales figures will be published, which can provide insight into consumer confidence and the overall state of the economy. In the U.S., reports related to housing, durable goods orders, and preliminary PMI figures will be released, offering a clearer view of business performance, purchasing power, and inflation trends.
In summary, the upward revision of employment data in the UK is a positive sign and could steer the central bank away from making stringent decisions. In the U.S., while some officials support rate cuts, concerns about inflation still persist. Meanwhile, the gradual rise in consumer confidence is an encouraging sign, but the stability of this sentiment depends on the continued downward trend in inflation.
All these indicators from employment data to consumer surveys, inflation expectations, and upcoming statistics help provide a better understanding of the path ahead for both the UK and U.S. economies. These figures may not reveal the whole truth, but they undoubtedly offer valuable clues about upcoming developments.
In the weeks ahead, markets will take new directions with the release of key data, and the decisions made by central banks will be closely scrutinized.
The Oil
The oil market last week, despite minor daily gains, ultimately experienced a slight decline in prices; Brent and West Texas Intermediate (WTI) crude fell by 2.07% and 3.29% on a weekly basis, respectively. This trend stems from a complex balance of opposing political, supply, and demand factors, which together provide a clearer picture of the market’s short term outlook.
One of the most significant influencing factors is the European Union’s approval of a new sanctions package against Russia, which lowers the price cap on Russian oil to $47.60 per barrel and bans the import of Russian petroleum products from third countries. Economic experts, including Iqbal Guliyev from MGIMO University, believe these sanctions are primarily political in nature and will have limited actual economic impact on Russia’s oil exports, as major buyers such as India, China, and others have bypassed these restrictions. As a result, the main pressure of the sanctions will fall on European consumers, who are likely to face higher energy prices.
On the other hand, production disruptions in Iraq’s Kurdistan region caused by four days of drone attacks have reduced the region’s oil output from about 280,000 barrels to around 140,000–150,000 barrels per day. This supply drop has raised concerns in the market and contributed to rising oil prices, with Brent crude reaching approximately $69.81 and WTI at $67.81.
In the U.S., crude oil inventories unexpectedly declined, but the increase in refined product and gasoline stocks kept the market’s reaction limited. In contrast, the summer travel season has pushed up gasoline demand, exerting upward pressure on prices. According to a report by J.P. Morgan, global oil demand in the first two weeks of July reached 105.2 million barrels per day a significant increase compared to last year.
U.S. domestic policies are also shifting; the federal government, by revoking certain environmental agreements in California and accelerating the issuance of drilling permits, aims to boost oil supply. However, the state’s governor remains committed to phasing out drilling by 2045, reflecting a contradiction in America’s energy policies.
Overall, the oil market in the short term is under upward pressure due to supply disruptions, sanctions, and seasonal demand, but there are notable uncertainties in the medium term. The possibility of increased OPEC+ production after the summer and U.S. tariff decisions expected by early August could lead to lower prices. As a result, traders are closely monitoring political and economic news and are currently maintaining a cautious stance.
In general, the combination of supply tensions, declining U.S. crude inventories, strong seasonal demand, and geopolitical pressures has set oil prices on an upward trajectory. This trend is expected to continue through the end of the third quarter and slightly balance out in the final quarter of the year with increased supply. However, political and geopolitical risks remain the most significant challenges facing the oil market.