As we begin the new week, we continue to observe volatile price movements in global markets. The week started with a critical political decision that we had also been anticipating. The U.S. reduced tariffs on Chinese goods from 145% to 30%, and China responded by lowering tariffs on U.S. goods from 125% to 10%. This mutual easing of trade tensions has increased risk appetite in the markets, prompting investors to shift toward riskier assets and temporarily diminishing gold’s appeal as a safe haven.
Macroeconomic Outlook: On May 7, 2025, the Federal Reserve held its Federal Open Market Committee (FOMC) meeting and decided to keep the federal funds rate steady at the 4.25%–4.50% range. This cautious stance reflects ongoing uncertainties and risks in the economy. Politically, former President Trump continues to pressure the Fed for rate cuts. Meanwhile, the Fed revised its 2025 economic growth forecast downward from 2.1% to 1.7%, while raising its core inflation projection from 2.5% to 2.8%. The unemployment forecast remained unchanged at 4.2%. Markets are currently pricing in the possibility of three rate cuts totaling 75 basis points throughout 2025. This expectation may strengthen further if economic conditions deteriorate. This week, Tuesday’s critical U.S. inflation figures and Thursday’s data—directly impacting monetary policy—will be closely watched. Although inflation had seen a slight uptick amid tariff uncertainties, it is likely to trend downward in the upcoming period. A cooling inflation outlook would support the Fed’s rate-cutting cycle, which could, in the longer term, reignite demand for precious metals.
Geopolitical Outlook: We are also going through a highly sensitive period in terms of geopolitical developments. On May 15, 2025, direct negotiations between Russia and Ukraine are expected to be held in Istanbul. Russian President Vladimir Putin announced a third ceasefire with Ukraine and proposed initiating talks without preconditions. Ukrainian President Volodymyr Zelensky welcomed the proposal and expressed readiness to participate in the talks. Gold, which started 2025 at the $2,625 level, closed the first quarter at a record high of $3,125, marking a strong upward move. Technically, as long as gold prices remain above the support level of $3,205, the uptrend is likely to continue. On the macroeconomic front, the expectation of interest rate cuts continues to support precious metal demand. However, if we see a lasting peace agreement between Russia and Ukraine, gold may come under selling pressure, with prices potentially retreating to the $3,200–$3,125 range. A breakdown below these levels could push the price down further toward the psychological support of $3,000.
Local Market Overview: In Turkey’s Grand Bazaar, gram gold closed last week at 4,200 TRY. However, the new week has seen increased downward movement, with current prices hovering around 4,090 TRY. In the Turkish market, premiums over the international spot price have risen to $45 per ounce, while the discrepancy in kilo bars compared to the London market stands at approximately $1,450. This week, investor attention remains focused on U.S. inflation data, the tariff negotiations, and the Russia–Ukraine peace talks.
According to the CME FedWatch Tool, the probability of a 100-basis-point rate cut by December is currently priced at 32%.
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