The stock markets and the economy have been running on credit: companies are borrowing heavily to invest in AI, while investors increasingly buy shares with borrowed money, driving prices even higher. The resulting rise in share values then serves as collateral for loans used throughout the economy. As long as oil prices and inflation keep rising and central banks are forced to raise interest rates, this self-reinforcing mechanism becomes increasingly vulnerable, at a time when monetary and fiscal policy have little room left to intervene.

Higher oil prices and persistent inflation could keep real interest rates elevated in the near term, creating headwinds for gold. However, escalating geopolitical tensions, reserve diversification and structurally expansionary fiscal policies continue to strengthen the long-term investment case. We therefore remain constructive on gold despite the potential for short-term volatility.

Please note: due to the summer break, the next Gold Report will be published on 25 August.

The US economy is less sensitive to rising energy prices than the European economy, and expectations of rate hikes by the Fed have increased. Yet, despite these supportive factors, the EUR/USD remains remarkably stable. In this FX update, we examine the reasons behind this resilience and explain why we nevertheless expect the EUR/USD to weaken further.