The U.S. Dollar Index fluctuated and edged higher this week. The U.S. July PCE data released on Wednesday reinforced the view that inflation is sticky, causing expectations for a September rate hike to rise slightly; however, concerns about the dollar’s creditworthiness stemming from U.S. Treasury repurchase agreements limited the currency’s gains.On Friday, Wash emphasized at Jackson Hole that the primary focus is on achieving the inflation target. The market interpreted this as a hawkish signal, causing the dollar to surge sharply in the short term; it closed at 99.69, up 0.85% for the week.
Analysts believe this marks the first time Wash has explicitly signaled a hawkish stance. He stated that the underlying trend of inflation has not substantially improved and that “there is still work to be done” if core inflation does not clearly return to the 2% target. Wash dismissed the effectiveness of forward guidance, emphasizing that financial conditions show no signs of being restrictive, thereby paving the way for a rate hike.Market bets on a rate hike in September have risen to nearly 60%, with the probability of a hike by December exceeding 90%.
Gold traded in a generally choppy and weak range this week. Early in the week, it briefly surged toward $4,700 per ounce, hitting its highest level since mid-May; subsequently, the PCE data drove up U.S. Treasury yields and the dollar, causing gold prices to fall by about 1.4% on Wednesday alone.Demand from ETFs and central banks continued to provide support, but prices fell following Wash’s remarks, dropping more than 3% in a single day—marking the worst single-day performance since early June—and closing at $4,454.28 per ounce, with a cumulative weekly decline of 3.24%. Spot silver fell 3.82% this week.
Crude oil fell significantly this week as the market assessed that the short-term supply shock from U.S. sanctions on Iran was less severe than that from military escalation, and traded on expectations of a de-escalation in the Strait of Hormuz; on Thursday, prices rebounded slightly as prospects for U.S.-Iran negotiations weakened.The U.S. military claimed to have cleared mines from the Strait of Hormuz, and Goldman Sachs estimated that two-thirds of Middle Eastern oil exports have resumed. Trump announced that the U.S. had gained “majority control” over more than 65 billion barrels of Venezuela’s oil reserves. Earlier reports indicated that Venezuela was seriously considering withdrawing from OPEC.