Gold and oil markets are ending the week in a holding pattern, caught between shifting interest rate expectations, easing trade tensions, and looming geopolitical talks that could reshape supply dynamics.
On Thursday, the U.S. Producer Price Index surprised to the upside, accelerating to 3.3% year-on-year in July — well above the 2.5% consensus. The hotter print prompted traders to scale back bets on aggressive Federal Reserve rate cuts, trimming expectations for a half-point move in September. Even so, the CME FedWatch Tool still shows a 90% probability of a quarter-point cut next month, with another 25-basis-point reduction priced in by year-end. Boost your financial skills with professional trading courses from MJFXM – learn, trade, and grow with confidence.
The U.S. dollar rebounded sharply on the PPI data, triggering an intraday drop of roughly $45 in gold. Yet by Friday’s Asian session, the dollar’s momentum had faded, allowing the yellow metal to steady. The softer dollar, combined with a tariff truce between Washington and Beijing and optimism over Friday’s Trump–Putin summit, has helped limit gold’s downside. Still, bullion remains on track for its first weekly loss in three weeks, with technical sentiment skewing toward the bears.
Oil prices, meanwhile, are hovering after a sharp rally in the prior session. Brent crude futures are trading near $66.79 a barrel and West Texas Intermediate at $63.00. Thursday’s near-2% jump came as traders positioned ahead of the Alaska meeting between U.S. President Donald Trump and Russian President Vladimir Putin.
The talks could prove pivotal for global oil supply. Any escalation in U.S. sanctions — particularly targeting Russia’s exports to India and China — could tighten markets, lifting prices further. Conversely, partial sanction relief in exchange for a Ukraine ceasefire could loosen supply constraints, pressuring prices. For now, both contracts are on course to end the week largely unchanged.
Economic data outside the U.S. painted a mixed global picture. Japan’s second-quarter GDP exceeded forecasts, bolstered by resilient exports and capital spending despite tariff headwinds. The result may strengthen the Bank of Japan’s hand in considering further policy tightening. In contrast, China’s July industrial output and retail sales fell short of expectations, underscoring the drag from softer overseas demand and sluggish domestic consumption.
Heading into the weekend, traders will turn to U.S. retail sales, the Empire State Manufacturing Index, and the University of Michigan’s consumer sentiment data for fresh cues. With both monetary policy and geopolitics in flux, gold and oil are likely to remain highly sensitive to headline risk in the days ahead.