Market Review: Global Economic Trends and Investment Insights

Overview of Global Market Performance

Global financial markets experienced notable volatility this week, influenced by movements in the dollar index, precious metals prices, oil markets, and assessments of major non-US dollar currencies.

Dollar Index

After a bullish start to the week, the dollar index entered a zone of significant volatility. On Tuesday, the dollar rose markedly following a slight uptick in US inflation for June, leading to adjustments in market expectations regarding interest rate cuts by the Federal Reserve. However, on Wednesday, the dollar experienced sharp fluctuations after conflicting statements from former President Trump about potentially removing Fed Chairman Jerome Powell. Additionally, rising US Treasury yields, particularly the 30-year Treasury yield exceeding 5%, contributed to bolstering the dollar's strength. As of this report, the dollar index is stable at 98.26.

Gold

Gold experienced significant volatility this week, with a general trend towards decline due to several factors including US economic data, rising Treasury yields, concerns over the Federal Reserve's independence, and tariff policies. On Wednesday, gold went through a highly volatile experience, briefly surpassing the $3370 level, but narrowed its gains after Trump denied drafting a dismissal letter for Powell. Currently, spot gold is trading at $3355 per ounce.

Silver

After a substantial rise at the start of the week, silver saw some pullback. On Monday, the price of silver exceeded $39 per ounce, marking its highest level since September 2011, expanding its gains for the year to 35%. At the time of this report, spot silver is trading at $38.29 per ounce.

Non-US Currencies

The rise in the dollar put pressure on other currencies such as the British pound, euro, Australian dollar, and Japanese yen. The British pound fell against the dollar to its lowest level since May 20, recording a loss for the third consecutive week. The dollar rose against the Japanese yen to 148, its highest level since May 13, posting gains for the third straight week. Conversely, the strong euro receded for the second week in a row, amid expectations that the European Central Bank will keep interest rates unchanged in July.

Oil

Global oil prices generally decreased this week, as the escalating trade war cast a shadow over oil demand forecasts. Additionally, Trump's threat to impose sanctions on Russia, which came with a 50-day grace period, did not alleviate concerns about immediate supply disruptions. Both benchmark crudes recorded losses for the first week in three weeks.

Risk Assets

On Monday, Bitcoin set a new record high above $120,000, pushing its market capitalization over $2.3 trillion. The cryptocurrency has risen 28% this year. The total market capitalization of cryptocurrencies exceeded $4 trillion, thanks to positive outcomes from the US "Crypto Week," where the House of Representatives passed three related bills overwhelmingly, and Trump introduced crypto assets to the retirement market.

US Stocks

US stocks continued to perform strongly, boosted by robust economic data and strong corporate performance. The S&P 500 and Nasdaq indexes reached new record highs, and NVIDIA's market capitalization exceeded $4.2 trillion, breaking records.

Investment Views and Analysis

Goldman Sachs: Goldman Sachs analysts still expect gold prices to reach $3700 per ounce by the end of 2025 and $4000 by mid-2026, reiterating their recommendation for "long-term gold buying."

Bank of America: Bank of America expects that the Federal Reserve will not cut interest rates until next year.

UBS: UBS expects the euro to rise against the dollar to 1.23 by June 2026.

Julius Baer Group: Economists at Julius Baer Group believe that the dollar may continue on a downward trend due to policy instability and increased financial pressures.

BlackRock: BlackRock indicates that the US Consumer Price Index shows that tariffs are gradually pushing prices higher, and most of the impact is yet to come.

Moody's: Moody's believes that global economic growth may slow to just over 2% this year.

Citi Group: Citi Group gives the Hang Seng Index a year-end target of 25000 points, calling for increased investment in Chinese internet, technology, and consumer sectors.

Important Events This Week

1. Trump's Threat to Fed Chair Powell: Former President Trump's statements about potentially removing Fed Chairman Powell raised concerns on Wall Street, leading to market volatility.
2. Market Expectations for Interest Rate Cuts: Despite mixed economic data, markets still expect interest rate cuts in September, with calls from some Federal Reserve officials for action in July.
3. Tariff Policies: The Trump administration announced new tariffs on several countries, raising concerns about global trade.
4. Economic Growth in China: China's GDP grew by 5.3% in the first half of the year, indicating the resilience of the Chinese economy.
5. Regional Security Issues: Increased tensions in the Middle East, including Israeli airstrikes in Syria, have raised international concern.