Weekly Outlook January 27-31, 2025

The reason for the decline was Trump‘s tax policies, which created inflationary pressures and disrupted the FED‘s interest rate reduction process. Following the decline, while the FED‘s projection expected 3 interest rate cuts in 2025, the expectation of just one cut continued to put pressure on gold prices for a while!

At this point, we are going through a rare period where US politics is steering the economy. Trump‘s every speech continues to stimulate risk appetite in the markets. Last week, President Trump stated that he had spoken with Chinese leader Xi Jinping and that they could reach an agreement on tax tariffs. Additionally, yesterday, Trump pointed to the FED, stating that interest rates were too high.

In Asia, Japan raised interest rates by 0.25 bps last week, which led to a drop in the Dollar Index from around 110 to 107 levels, indicating that the dollar is losing strength. As the dollar weakens, we are seeing an increase in demand for US stocks and precious metals. Gold is currently trading at around $2770, very close to its historical peak of $2790.

On the Turkish Central Bank (TCMB) side, interest rates were again adjusted to 45.00% last week. The market expectation of the continuation of the central bank‘s critical interest rate cuts has led to a slight depreciation of the Turkish lira, with the USD/TRY exchange rate hitting 35.75 in the Grand Bazaar. Of course, both the rise in the dollar and the increase in gold prices led to a new historic high for the gram gold price. Gram gold hit 3190 TRY in the Grand Bazaar, setting a new record!

In the upcoming period, both the FED’s and TCMB’s decisions, as well as President Trump’s policies, will continue to be decisive factors for gold prices. On the FED side, the expectation for one interest rate cut seems to be shifting to two, which could lead to further buying interest in precious metals. Specifically, the $3150 level for gold could be technically marked as a critical target zone. On the USD/TRY side, a technical target of 38.00 TRY might be set for the upcoming period. In this case, the gram gold price could reach a target price range of 3700 TRY to 4000 TRY.

Finally, the Trump administration’s announcement of an increase in oil production has raised the possibility of a decline in oil prices, which could again lower US inflation, potentially supporting the FED’s interest rate reduction policy. The support for this interest rate cut policy could, in turn, increase global demand for both gold and silver. This week, all eyes will be on the critical FED interest rate decision on Wednesday! No changes in interest rates are expected, but comments on the ongoing Trump-FED conflict could directly impact the market. On Thursday, a 0.25 bp interest rate cut is expected from the Eurozone. After the ECB’s decision, on Friday, the critical 4th Quarter GDP data from the US and the key Core Personal Consumption Expenditures (PCE) price index will be the main focus of the market!

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