Recently, global financial market activity has been sluggish due to the year-end holiday season, which typically leads to tighter liquidity conditions.
During the last quarter of the previous year, significant US economic data was withheld because of the government shutdown.
Meanwhile, ongoing global trade disputes, an unresolved issue for many nations, have complicated market assessments of the economy’s actual impact.
Now that the trade issues are resolved to a greater extent and economic data will be released regularly, market participants are set to focus on these updates.
However, it is anticipated that Federal Reserve policymakers will be hesitant to lower interest rates any further in January, with attention turning towards the March policy announcement. The minutes from the recent FOMC meeting portrayed a contrasting scenario, revealing significant disagreement among voting members.
While the interest rate outlook showed a dovish tone, inflation expectations were raised, and the labour market assessment appeared negative.
Starting this week, the global financial markets are expected to regain momentum for the remainder of the year.
With a significant amount of data being released worldwide this week, the US jobs data will undoubtedly be a focal point, alongside job conditions and new trade tariffs.
In the forthcoming weeks, trade policy discussions will intensify as the market closely monitors a court ruling concerning US tariff regulations. After much debate about gold leading into 2025, it will be interesting to see if silver, which has surged more than 150% due to industrial demand and physical shortages, can maintain its upward trajectory. There was a notable sell-off in silver during the final days of December 2025, prompted by extraordinary measures aimed at curbing its price increase. Additionally, copper prices soared to new highs, driven by short supply and increased Chinese demand.
Both the fundamentals and demand trends indicate a bullish outlook for both commodities.
At the same time, sentiment towards the US dollar appears somewhat weak, driven by expectations of an upcoming easing in the Fed’s policy rate this year.
In contrast, both the Bank of England and the European Central Bank seem content with the gradual slowdown in inflation, which may allow them to maintain or postpone any rate cuts.
Much will hinge on the upcoming release of US economic data. Strong economic indicators could bolster the USD.
In the case of the $/Yen pair, the situation is different as some Bank of Japan policymakers express concerns over rising inflation, suggesting the possibility of further rate hikes.
However, the currency market has a different perspective, with the Yen likely to face pressure against the USD due to yield differentials. Nevertheless, there is always the risk of intervention as the situation evolves and if the Japanese Yen weakens, though the BOJ is unlikely to act hastily.
GOLD
Regarding gold’s movements this week, it is crucial to acknowledge that the recent price fluctuations occurred without the involvement of major market players and corporations.
Therefore, the implications of the CME’s announcement regarding a second margin requirement will be clearer once all market participants are fully engaged.
While the fundamentals remain unchanged and gold prices are expected to regain upside momentum, there is still ample potential for a correction before they embark on another rally.
However, with the news of US led military operations in Venezuela is positive for gold as a safe-haven asset. The market will be closely observing conditions in the region and the reactions of its allies, particularly Russia.
Panic trading could potentially drive gold prices easily above $ 4400 towards $ 4500 or even reach all-time highs. However, if the situation stabilises, we can expect a correction in gold prices.
It will be interesting to see how silver responds, as it might also benefit from this development.
Additionally, oil is likely to gain from this news, considering Venezuela’s production of 1.1 million barrels of heavy crude oil daily. As a result, the market should prepare for a price increase of $ 5 to $ 10 in Brent and WTI.
The financial market is undoubtedly approaching another week filled with significant volatility.
WEEKLY OUTLOOK — JAN 5-9
GOLD @ USD 4330.50— Gold is heading for a choppy ride. It is expected to rise sharply at first. It could easily move above USD 4398 and approach the USD 4500 mark or higher before making a correction. On the downside, support levels are at USD 4265-70 or USD 4220.
EURO @ 1.1720 — Euro has support at around 1.1610 and 1.1550, while facing resistance near 1.1790 and 1.1840.
GBP @ 1.3460 — Pound Sterling might find it difficult to rise above 1.3550. If it drops below 1.3360, further declines could occur, potentially reaching 1.3295.
JPY @ 156.84 — As long as the $/JPY pair remains within the 157.65-75 range it may reach 155.80 or 154.50. Otherwise, it could rise to 158.20.
Copyright Business Recorder, 2026
The writer is former Country Treasurer of Chase Manhattan Bank. The views expressed in this article are not necessarily those of the newspaper
He tweets @asadcmka
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