Markets continued their marked adjustment this week, as the significant long positions on the dollar unwound further, crude oil prices stabilized after an initial drop, and precious metals extended their gains.
Markets continued their significant adjustment this week, as large long positions on the dollar were further unwound, crude oil prices stabilized after an initial drop, and precious metals extended their gains. These movements come in a context of lingering hopes that the Trump administration has made rapid progress in resolving tensions with Iran and stabilizing the Middle East as a whole.West Texas Intermediate traded near $94-96 per barrel and Brent around $100 after falling from high levels, based on expectations of flows restored through the Strait of Hormuz. Gold surpassed $4,700 per ounce and silver crossed the $80 mark, reflecting a weaker dollar, safe-haven flows, and an easing of short-term inflation fears, even as risk assets advanced. The main drivers of the gold rally include persistent purchases by central banks, notably in emerging markets, strong inflows into ETFs in a context of ongoing geopolitical uncertainty, as well as its dual role as a safe-haven and inflation-adjusted asset in an environment of lower real yields. The U.S. dollar index fell to around 97.8-98.0 as traders priced in likely lower energy costs.to ease inflationary pressures and encourage rate cuts by the Federal Reserve.
“Is Trump’s Middle East problem solved in just three months?” wondered an experienced broker. “Or is it just a pause in a longer conflict?” Skeptics argue that Iran is playing a long game of attrition through proxies and asymmetrical tactics, while the administration favors short-term gains for stock and cryptocurrency prices as well as building a legacy within the framework of a limited political term. International relations, they point out, progress like a cargo ship rather than a speedboat.
