Market Insights July 28, 2025

The US Dollar: A Tentative Stabilization

The US dollar appears to be stabilizing in July. A technical rebound is even conceivable after the sharp decline recorded in the first half of the year (a drop of over 10% against the Swiss franc). Despite this potential temporary recovery, we remain cautious. The risks of further depreciation remain significant. The fundamental context continues to point to dollar weakness, notably due to the widening budget deficit linked to the Trump administration’s policies—characterized by tax cuts and a sharp increase in spending, without equivalent fiscal offsets. The trade deficit, meanwhile, is expected to continue widening despite ongoing tariff hikes. Moreover, the yield advantage offered by the dollar may shrink, as the US Federal Reserve is expected to resume cutting interest rates as early as this fall. In parallel, Washington’s industrial strategy appears to implicitly support a weaker dollar. In their push to reindustrialize the country, US authorities view a lower exchange rate as a lever to restore the competitiveness of exports.

Commodities – Precious Metals Shine!

The commodities market has experienced two very distinct phases since the start of the decade. Initially, until mid-2022, oil was clearly dominant, driven by the post-Covid recovery, low inventory levels, and geopolitical tensions, particularly following Russia’s invasion of Ukraine. At the time, oil prices surpassed $120/barrel, and investors feared a global energy crisis. Meanwhile, gold lacked momentum.

Since then, dynamics have reversed. Gold has delivered an impressive performance, supported by sustained demand from central banks. It is now the second largest global reserve asset after the US dollar, surpassing the euro. And this strategic interest continues to be robust, as highlighted in a recent survey of central bankers’ purchasing intentions. In a fragmented world marked by geopolitical tensions and monetary uncertainty, gold is reclaiming a central role in sovereign allocations. Furthermore, this trend appears to be expanding to other precious metals, indicating renewed investor interest from previously depressed levels and a rebound in industrial demand. Silver is on the rise and nearing its 2011 highs. Platinum is showing signs of life after a decade of stagnation. Even palladium, long penalized by declining demand for combustion-engine vehicles, is beginning to show renewed activity.

Oil, by contrast, faces downward pressure. Despite ongoing geopolitical instability in the Middle East, fundamentals remain weak: OPEC continues to increase production, which will support a normalization of inventories. This dynamic should keep prices in a lower range, between $60 and $70 per barrel. While the current lack of investment and the rapid decline of excess production capacity may eventually trigger another bullish phase, we believe it is still too early to turn optimistic.

Additionally, recent shifts in US trade policy, marked by a more aggressive use of tariffs, could eventually reshape the commodity landscape. Should industrial reshoring or long-term supply chain fragmentation take hold, certain metals, such as copper, may gain strategic importance. While this sectoral leadership shift remains a plausible scenario, it is still premature: current signals are too weak to make it our central hypothesis. 

This week’s figure: 15 %

Is the rate at which European products entering the United States will now be taxed. European stock markets have welcomed the announcement, as the uncertainties stemming from trade tensions are expected to ease at last.