Weekly Outlook

Weekly Market Overview: All Time High

| 11 February, 2025 at 12:00 GMT

       What a performance ! Gold traded on Tuesday at $2930 per ounce, all time high, maintaining the gains in 2025 by more than 11% YTD, 44% YoY and more than 80% in 5 Years. It was a mix of economics & geopolitics. US President Trump imposed 25% tariffs on steel & aluminum imports, not to forget that he already planned to impose another 25% tariffs on the imports from Mexico & Canada, 10% on China as well. 

     What the tariffs are likely to cause is higher cost on the imported goods to the US that the US consumers & producers will pay for . In other words, inflation is likely to increase, and the Fed will be forced to keep the rates elevated. Higher inflation, weaker rates from the other central banks ( ECB, BOE) , and central banks’ continuous purchase of gold will be the best scenario for gold. So,  trend remains bullish.

Chart: Bloomberg  

            In the meantime, oil prices started a new trading week on Monday  after negative weekly closing, before recovering on Tuesday. It was very clear that Trump’s intentions to lower energy prices may face tougher challenges than expected. Reports showed that Russian oil production fell below its OPEC+ quota in January. At the same time, Trumped argued Israel to end its ceasefire with Hamas if hostages are not returned this weekend, so geopolitical tensions intensified again. The pressure on OPEC & GCC countries by Trump’s himself may cause more tensions & uncertainty that will result in higher oil prices, that’s not what Trump wants. Oil benchmarks , WTI & Brent remained up by 2% in 2025. 

Chart : Bloomberg 

All eyes will be on Wednesday’s CPI numbers from the US. Inflation from America was & still the major catalyst in the Fed monetary policy & US bond yields performance & pricing. Chart below shows positive correlation between the US CPI indicator & USD index – DXY performance where the high & sticky inflation resulted in stronger USD that gained almost 4% YoY. Chart: Tradingview 

     The higher the inflation, the stronger the USD is likely to remain. The annual inflation rate in the US increased to 2.9% last December 2024. FYI, the Fed already put a target at 2% for inflation to be met, however the ongoing trade war & US tariffs are unlikely to help the Fed, it will just complicate the mission for both, the White House & Federal Reserve policy makers.