The financial landscape presented a mixed picture over the past week, with key commodities like gold and oil showing signs of pressure while the US dollar staged a tentative comeback. Gold saw investors banking profits after a significant climb, whereas oil prices were weighed down by potential supply shifts. The dollar’s bounce offered temporary relief, yet underlying concerns about its longer-term valuation persist among market watchers.
Gold Retreats After Record Highs
Gold prices pulled back during the week, following a recent surge where the precious metal approached the $3,500 per ounce mark. Profit-taking appeared to be the primary driver for the downturn, even as demand through exchange-traded funds (ETFs) remained solid. The April futures contract reflected this weakness, settling down 1.5% on Friday at $3,282.40. This contributed to a cumulative weekly loss of 0.8%, marking the third decline in the last four trading sessions. Ole Hansen at Saxo Bank suggested the rapid pace of the recent rally raises questions about its sustainability without a period of price consolidation.
Oil Ends Week Lower Amid Supply Concerns
Crude oil markets finished a volatile week with net losses, influenced by ongoing concerns regarding production discipline within OPEC+ and the potential for increased supply from Iran. While West Texas Intermediate (WTI) saw a modest gain of 0.4% on Friday to $63.02, it still recorded a 1.5% decline over the week. Similarly, Brent crude rose 0.5% to $66.87 on the final trading day but ended the week 1.6% lower. According to Quasar Elizundia from Pepperstone, pressure persists due to perceived lack of cohesion within the producer group, despite some positive signals emerging on the global trade front.
Dollar Rebounds but Faces Structural Headwinds
The US dollar interrupted its recent downward trend, posting its most significant weekly advance since March. This recovery was partly supported by a rally in US equities and a decrease in overall risk aversion among investors. The WSJ Dollar Index climbed 0.3% on Friday to 96.34, securing a weekly gain of 0.28%. However, despite this improvement, the index remains down 3.43% for the month and 6.25% year-to-date. Analysts at Deutsche Bank caution that the current US administration’s tariff policies could potentially exacerbate the nation’s twin deficits (budget and current account), contributing to a longer-term structural downtrend for the currency.
Major Currencies Adjust to Dollar Strength
The dollar’s temporary resurgence impacted other major currencies. The Euro dipped 0.2% to $1.1362, influenced by the stronger performance of US stocks which reduced downward pressure on the greenback. Chris Turner at ING suggested that continued strength in equities could push the Euro towards $1.1250, although he anticipates structural selling pressure on the dollar could soon re-emerge. Meanwhile, the Japanese Yen weakened, falling 0.6% to 143.566 per dollar. Derek Halpenny from MUFG Bank expressed skepticism about the sustainability of the dollar’s rebound, citing the potential negative impact of US tariffs, under the current administration of President Donald Trump, on domestic economic growth.
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