Market Overview

Global financial markets closed last week amid heightened volatility, as investors continued to digest the Federal Reserve’s third interest rate cut of the year and reassess global growth prospects. While the US dollar attempted a modest rebound, broader sentiment remained tilted toward risk rebalancing, with precious metals attracting strong inflows and energy markets under sustained pressure.

The US Dollar Index edged slightly higher on Friday but failed to hold gains during the US session, closing nearly flat at 98.40. Despite the marginal daily increase, the index recorded its third consecutive weekly decline, reflecting persistent downside pressure from expectations of further monetary easing in 2026. US Treasury yields ended mixed, with the benchmark 10-year yield settling near 4.18% and the policy-sensitive 2-year yield closing at 3.53%, underscoring ongoing uncertainty around the Federal Reserve’s policy trajectory.

Precious Metals: Gold Shines as Rate-Cut Expectations Intensify

Gold extended its bullish momentum, delivering one of its strongest weekly performances in recent months. Spot gold rose toward the $4,300 level, reaching an intraday high near $4,353 per ounce, marking its highest level since late October. US gold futures followed suit, closing near $4,328 per ounce.

The rally was fueled by growing confidence that the Federal Reserve’s easing cycle may extend further into next year. Although the Fed maintained a cautious tone, markets interpreted the third consecutive 25-basis-point rate cut as confirmation that policymakers are increasingly concerned about slowing economic momentum. Lower real yields and a softer dollar continued to reduce the opportunity cost of holding non-yielding assets, reinforcing gold’s appeal as both an inflation hedge and a defensive asset.

Silver, after surging to a historic high above $64 per ounce earlier in the session, experienced sharp profit-taking and closed significantly lower near $62. Despite the pullback, analysts noted that silver’s longer-term fundamentals remain supported by rising industrial demand. Platinum stood out among precious metals, climbing to its highest level since 2014, while palladium also posted modest gains.

Energy Markets: Oil Extends Losses on Supply Glut Concerns

Crude oil prices remained under pressure, extending their downward trend for a second consecutive week. Both WTI and Brent benchmarks closed lower on Friday, posting weekly losses exceeding 4%. WTI settled near $57 per barrel, while Brent hovered just above $61.

Market sentiment continued to be dominated by concerns over global oversupply, overshadowing geopolitical tensions involving Russia, Ukraine, and Venezuela. While recent drone attacks on Russian oil infrastructure and escalating US-Venezuela tensions briefly lifted prices, traders largely dismissed these developments as insufficient to offset the structural supply imbalance.

The International Energy Agency’s latest outlook further reinforced bearish sentiment, projecting that global oil supply could exceed demand by nearly 3.8 million barrels per day next year. This anticipated surplus, equivalent to roughly 4% of global daily consumption, has become the defining narrative for energy markets.

Currency Markets: Dollar Struggles as Major FX React to Policy Shifts

The US dollar remained broadly weak, constrained by softening economic data and shifting interest rate expectations. While the dollar edged higher against the yen, closing near 155.90, attention increasingly turned to the upcoming Bank of Japan meeting, where markets widely expect a rate hike.

The euro held near multi-month highs against the dollar, consolidating around 1.1735 after touching levels last seen more than two months ago. The single currency continued to benefit from steady European Central Bank messaging and broad-based USD selling following the Fed decision.

Sterling underperformed after UK data revealed an unexpected contraction in GDP between August and October. The weak growth figures reinforced expectations that the Bank of England may move toward rate cuts sooner than previously anticipated, pushing GBP/USD lower toward the 1.3375 region.

Equity Markets: Global Stocks End Week Lower

Equity markets closed the week on a softer note as investors reassessed risk exposure. US stocks ended lower across all major indices, with technology shares leading losses. European equities also declined, with major benchmarks in Germany, the UK, and across the Eurozone finishing in negative territory.

The pullback reflected a combination of profit-taking, lingering growth concerns, and uncertainty around the pace of global monetary easing heading into the new year.

Technical Outlook: Dollar, Euro, and Gold

From a technical perspective, the US Dollar Index continues to face resistance below the 98.55–98.60 region, with downside risks remaining dominant as long as the index holds below this zone. Failure to sustain rebounds could expose further weakness toward the 98.15 area.

EUR/USD remains technically constructive, with price action supported above the 1.1720 region. As long as this support holds, the pair retains upside potential toward the mid-1.17s, with momentum favoring further gains on dips.

Gold continues to trade within a strong bullish structure. Support remains firm above the $4,250 area, while a sustained break above $4,350 could signal the next leg higher toward the upper $4,400 region. Only a decisive move below $4,200 would begin to challenge the prevailing bullish bias.

Market Outlook

Looking ahead, investor focus will shift toward upcoming US employment data and other high-impact macroeconomic releases that could provide further clarity on the health of the global economy. With monetary policy expectations firmly in play, markets are likely to remain sensitive to any data that alters assumptions about the timing and depth of future rate cuts.

In the near term, gold appears well-positioned to remain supported, the US dollar vulnerable to further downside, and oil prices constrained by fundamental oversupply dynamics. Volatility is expected to remain elevated as markets approach year-end with a cautious, data-driven stance.