Rising interest rates and a stronger dollar could push gold lower in the coming months. Yet we remain firmly bullish over the longer term and view any decline towards $3,500 as a compelling buying opportunity.

Trump’s popularity has fallen sharply and he will have to pull out all the stops if the Republicans are to retain control of Congress in the mid-term elections in November. This means he does not want a war with Iran and wants to keep oil prices low. Iran is exploiting this by keeping up the pressure to force concessions from the US. This, in turn, makes Trump more unpredictable, and this is likely to continue to influence the currency markets for some time.

It is striking how differently economists and analysts view the implications of the Iran deal and the rise of AI for economic growth and inflation. If we look at the charts for gold, the yield curve, the S&P 500 and the dollar index, the markets’ expectations are quite clear. In this report, we examine what these market expectations are, how we view them, what role China’s rise plays in this context, and what this means for key interest rates and exchange rates.