Following nine consecutive weeks of gains, the first such streak in over five years, gold prices have taken a breather. This surge, driven more by enthusiasm than by fundamental developments, led to an excess of optimism. Over the past ten days, the yellow metal has corrected by nearly 8%, a welcome pullback to restore balance to the market. However, in the absence of negative fundamental news, we do not believe this challenges our medium-term positive outlook. For the past two years, gold has been moving in cycles: 2- to 3-month rallies followed by longer consolidation phases.
In our view, a new digestion phase has begun, which should allow the market to absorb recent excesses. With a year-to-date performance exceeding 50%, gold remains one of the best-performing assets, even if it were to stagnate through the end of December.
Over the past several years, the Swiss National Bank (SNB) has progressively shifted its communication strategy, embracing a markedly more transparent approach. This transformation aims to enhance the credibility of monetary policy and reduce market uncertainty. Verbal interventions, once rare and cautious, have become more frequent and explicit, reflecting a clear intention to better guide investor expectations.
This practice has taken another step forward: the SNB will now, in line with several of its counterparts, publish minutes from its monetary policy meetings.
In its first recently released account, the SNB addressed US tariffs and highlighted a particularly sensitive issue, the persistent strength of the Swiss franc. Despite the widening interest rate differential between the eurozone and Switzerland, and between the United States and Switzerland, the Swiss currency continues to attract safe-haven flows, trading at levels near historical highs. This situation raises concerns about the competitiveness of exports and price stability, two cornerstones of Switzerland’s monetary strategy.
Given this context, the risk of foreign exchange market intervention has undeniably increased. While the SNB officially maintains a flexible stance, the likelihood of foreign currency purchases to curb franc appreciation cannot be ruled out, especially as the currency approaches the critical threshold of 0.92 against the euro, a level recently mentioned in policy discussions. This vigilance reflects a broader effort to preserve monetary conditions supportive of the domestic economy.
Finally, it is worth highlighting a major diplomatic development: the signing of an agreement with the US Treasury to ensure that any such interventions are not interpreted as currency manipulation. This bilateral commitment illustrates Switzerland’s desire to reconcile its monetary policy needs with demands for transparency and international cooperation, thereby reinforcing its reputation as a stable and rules-abiding financial centre.
The US inflation figure for the month of September was released with a delay due to the government shutdown. The announced number came as a positive surprise for the markets, as consumer price growth slowed compared to the previous month. This paves the way for a continued easing of monetary policy.