Whether by design or not, Trump is still pulling the strings of global financial markets, with the words of the US President able to either add fuel to the fire or douse the flames regarding market volatility. Investor anxiety levels were ramped up this week following Trump’s combative remarks about Jerome Powell and a seeming intent to replace the Fed Chairman before his term expires in May 2026. This, in conjunction with ongoing tariff worries saw risk aversion on the rise to start the week.
But then we saw a familiar pattern emerge, when markets performed a U-turn following a softer tone from the White House regarding both trade with China (after Treasury Secretary Scott Bessent gave some hope that a trade deal may be reached) and on Jerome Powell (after Trump said he has no intention to fire him). These moves from Trump and his team did indeed douse the flames of volatility to some degree, with risk assets staging a rebound (with the Dow closing more than 1000 points higher on Tuesday) even though tariffs remain the prime concern for traders.
Extreme market moves followed by swift reversals have become a defining feature of financial markets this month in response to Trump’s apparent policy-on-the-run approach. Gold’s moves this week are one such example. The gold chart this week is one for the books, after the precious metal made a charge up to $3500 (a fresh all-time high) on the Trump-Powell dramas and tariff woes before reversing course as safe haven demand took a step back on Bessent’s and Trump’s remarks about China and Powell respectively.
Gold is back trading at a more modest level (at around $3340 as of early Asian trading hours on Wednesday) following its foray to $3500, with a mild rebound in the Dollar, an uptick in risk appetite and overbought conditions in the precious metal all contributing factors. Levels to watch from here are support at $3305, ahead of firmer support waiting at $3174, while resistance sits at $3480. Where gold heads from here in the near term is dependent upon whether we see escalation or de-escalation from the US administration regarding tariff policy. Though in the medium and longer term, the fundamental picture still favours the upside with central banks still adding gold to their reserves, and uncertainty surrounding global growth and interest rates.
The US Dollar is attempting to stage a rebound, with markets feeling slightly calmer about China-US trade prospects (following Scott Bessent’s comments) and Fed stability. After falling below the 98 level earlier this week (and to a 3-year low), the Dollar Index (DXY) is now back at 99.60. The USDJPY is clawing back ground after dipping below 140 and is now at 142.60. Whether the rebound in the greenback has more room to run on the upside could depend on whether Trump takes a hardline or softer stance on tariff negotiations (with a softer stance being the scenario which would likely aid the USD the most).
The US posture towards Iran has been shaping the crude oil price. How US sanctions on Iran and how the possibility of an agreement on the nuclear front effect supply has kept the price of US crude (WTI) bouncing around predominantly in the $61-$64.50 range since mid-April. While oil has also been moving on the latest tariff headlines and has been following the direction of stocks on risk-sentiment. Resistance at $65.25 would need to be overcome for oil to make a topside break out of the current range, while support awaits at $60.50. Until oil breaks through either of those levels, continued range trading looks to be in place.
Looking ahead, EU, UK and US Services and Manufacturing PMI’s will be closely watched Wednesday, while on Friday we will see Tokyo Core CPI data and UK retail sales figures. And of course, markets will continue to listen out for the latest White House rhetoric on tariffs and any hints of upcoming trade deals. As such, market direction will more likely than not continue to be dictated by Trump’s latest whims regarding tariffs and trade.
