What a week it’s been in the financial world (August 11-13, 2025)! Markets were buzzing with a crucial inflation report and a wild ride for gold, all against a backdrop of unpredictable trade policy. Let’s dive into the action!
US CPI: Mixed Signals, Clear Market Reaction!
On August 12, the July US CPI report hit the wires. Headline inflation was stable at 2.7% year-over-year, but here’s the twist: core CPI (excluding volatile food and energy) unexpectedly accelerated to 3.1% – a five-month high! This sticky core inflation is directly linked to tariffs pushing up import prices. Yet, the market’s reaction was pure “rate cut euphoria”! Equities soared (S&P 500 hit a new record!), and the US Dollar (DXY) tumbled to a two-week low. Investors are clearly betting big on a September Fed rate cut, despite the underlying inflation heat.
Gold’s Tariff Rollercoaster: From Soar to Settle!
Gold experienced whiplash this week! It started with a shock: US Customs ruled that certain gold bars (1kg/100oz) would be subject to tariffs, ending previous exemptions. This news sent gold futures soaring, creating a massive premium over spot prices as global bullion markets rattled. But then, on August 11, President Trump stepped in with a swift declaration on Truth Social: “Gold will not be Tariffed!” 🤯 Just like that, gold prices corrected sharply, unwinding much of their tariff-fueled gains. This episode perfectly illustrates the unpredictable nature of trade policy and its immediate, dramatic impact on markets.
FX Majors: Riding the Dollar’s Weakness
- US Dollar (DXY): Continued its slide, pressured by those strong Fed rate cut expectations. It tested key support around the 98.00 handle, signaling a bearish bias.
- EUR/USD: Capitalized on the dollar’s weakness, showing a bullish bias. The Euro gained ground as the market priced in a more aggressive easing path for the Fed compared to the European Central Bank.
- GBP/USD: Showed surprising resilience! Despite the Bank of England’s recent rate cut, the Pound rallied. This “hawkish cut” (a split vote and cautious inflation outlook from the BOE) made GBP relatively more attractive against a weakening dollar.
- Gold (XAU/USD): After its tariff-induced volatility, Gold consolidated. While the immediate tariff threat subsided, underlying factors like potential Fed easing and broader economic uncertainties continue to provide long-term support for its safe-haven appeal.
What’s Next?
Expect continued market volatility! The tug-of-war between inflation concerns and rate cut hopes will keep the Fed in the spotlight. Plus, the unpredictable nature of trade policy means more surprises could be around the corner. Keep a sharp eye on economic data and policy announcements!
Stay informed with JDR Securities for expert insights and navigate these dynamic markets with confidence.
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