Market Insights May 26, 2026

Gold consolidates despite a complex geopolitical environment

After reaching highs in early January, gold prices have entered a consolidation phase, broadly fluctuating between USD 4’500 and USD 4’800 per ounce. This stabilisation follows the sharp rally recorded at the end of last year and initially reflected a typical adjustment after excessive investor optimism.

However, the recent intensification of geopolitical tensions in the Middle East has altered market dynamics. Concerns focus on potential liquidity needs, as some oil-producing countries may be forced to draw on their reserves, while importing countries such as Turkey face higher energy costs.

Against this backdrop, gold is behaving less like a traditional safe-haven asset and has underperformed risk assets. Over the long term, the diversification of official reserves away from the US dollar remains a structural support. In the short term, however, we expect the yellow metal to trade broadly sideways in the absence of a catalyst. We therefore favour a cautious approach and await clearer signals before considering increasing exposure to this asset.

Diplomatic progress eases pressure on bond yields

After several weeks marked by heightened volatility across global bond markets, signs of stabilisation are beginning to emerge as diplomatic prospects in the Middle East become clearer. Indirect discussions between the United States and Iran, combined with a reduced immediate risk of military escalation in the Gulf region, have helped ease expectations regarding energy prices and, by extension, global inflation expectations.

Over recent months, investors had gradually priced in a scenario of persistent inflation. The resilience of US economic growth and the rise in oil prices linked to geopolitical tensions had led to a significant increase in sovereign bond yields, particularly at the long end of the curve. In the United States, 10-year Treasury yields remained elevated, while in Europe, German and French government bonds also faced substantial selling pressure. Even some emerging markets experienced a widening in term premiums amid growing uncertainty surrounding central banks’ monetary policy trajectories.

However, the recent decline in energy prices is gradually reshaping market dynamics. Investors are beginning to consider a scenario in which the peak in energy-driven inflation remains contained, allowing central banks to adopt a more neutral stance over the coming quarters. This development is supporting a stabilisation in yield curves and, in some cases, the early stages of easing at longer maturities.

Against this backdrop, long-duration bonds are gradually regaining strategic appeal. The real yields offered by US, UK and Australian sovereign debt are once again becoming attractive for institutional investors seeking carry and diversification. Within the euro area, certain investment-grade segments are also offering more compelling entry points than at any time over the past two years.

The Swiss market, however, remains a notable exception. Swiss Confederation bond yields continue to be structurally low due to the strength of the country’s public finances, persistent safe-haven inflows and domestic inflation that remains significantly better contained than in other developed economies. This particularity continues to limit the relative attractiveness of long-duration bonds denominated in Swiss francs.

Overall, a window of opportunity appears to be emerging for gradually extending duration within international portfolios. A more formal diplomatic agreement between Iran and the United States, involving a lasting safeguarding of energy flows and the full reopening of the Strait of Hormuz, could reinforce this trend by further reducing the inflation risk premiums embedded in global bond markets..

This week’s figure: 47.5

The purchasing managers’ index came in below expectations at 47.5. Services activity was weighed down by uncertainty surrounding the conflict in Iran, which continues to undermine consumer confidence, while the manufacturing sector remains relatively resilient. A resolution of the conflict and the reopening of the Strait of Hormuz should support a rebound in the services sector.