Daniela Hathorn

The recent slide in the US dollar has raised questions about whether a deeper, more structural downturn is re-emerging. Yet the bulk of the currency’s weakness appears rooted not in deteriorating fundamentals, but in shifts in market positioning and a dovish reading of the latest Federal Reserve meeting. In the near term, the dollar may continue to soften, but its trajectory in the coming weeks will depend squarely on whether investors stay confident that the Fed still has ample room to ease.

Silver has staged an impressive rally in recent weeks, breaking higher alongside gold but far outpacing it in momentum. XAG/USD has climbed sharply, pushing through resistance levels with an almost parabolic rise. Yet behind the strength lies a mix of structural bullish drivers and increasingly speculative market behaviour — reflected most clearly in the dramatic drop in the gold–silver ratio.

Today’s long-awaited Nonfarm Payrolls report finally delivered data covering both October and November, following delays from the government shutdown. The figures confirm that job growth remains modest and the labour market continues to slow, with 64,000 payrolls added in November after a dip in October, a clear deceleration from prior months. The unemployment rate rose slightly higher than expected at 4.6%, further softening from earlier in the year, and wage growth continues to ease modestly compared with previous months. All told, this is consistent with a labour market that is losing steam rather than overheating.

This past week delivered a dense run of central-bank decisions and key data releases, leaving global markets navigating mixed signals heading into the final stretch of the year.

Risk appetite appears to have returned to global markets, with major equity indices ending last week on a strong note, driven largely by a rebound in the technology sector. In Asia, the Nikkei has led the gains, benefiting from a weaker yen following Friday’s Bank of Japan meeting, which further bolstered already-improving sentiment. In Europe, the upside has been more measured, with a tentative start to the week, though the near-term bias could remain constructive if broader risk sentiment holds. With markets heading into the Christmas holiday, this will be a shortened trading week, meaning any momentum is likely to be concentrated in the days ahead.

Gold has continued to trade near multi-month highs, supported by a mix of macro uncertainty, real yield dynamics and central bank messaging. The biggest driver recently has been the sudden escalation of geopolitical risk around Venezuela which has increased uncertainty in global energy markets and broader geopolitical stability. The US has imposed a naval blockade and targeted sanctioned oil tankers, sharply reducing Venezuela’s exports as vessels avoid Venezuelan waters. This has disrupted shipping flows and piled up crude in storage, highlighting how political conflict can spill over into physical markets and supply reliability even if production volumes remain relatively small. In response, investors have repriced geopolitical risk, including uncertainty over U.S.–China trading relationships.

Markets are currently struggling to find a clear directional bias, as conflicting geopolitical developments in the Middle East continue to dominate sentiment. Investors are caught between opposing narratives, the potential for escalation on one hand, and the possibility of de-escalation or even peace negotiations on the other, making it increasingly difficult to price in future outcomes with confidence. Recent headlines have only added to the uncertainty. This lack of a clear policy path reinforces the sense that markets are trading headlines rather than fundamentals.

Gold has begun to stabilise after its sharp selloff, with the chart showing a tentative rebound toward the $4,700–$4,800 area. Technically, this looks like a corrective bounce rather than a full reversal. Price remains below key resistance levels around $4,900–$5,000 and is still trading under its shorter-term moving averages, suggesting the broader loss of momentum from the February highs remains intact. The RSI has recovered from oversold territory but is only back to neutral levels, reinforcing the idea that this is a rebalancing move rather than a renewed bullish trend. For a more constructive outlook, gold would need to reclaim the $4,900 region and hold above it; otherwise, the risk remains for further consolidation or downside.

Markets are increasingly pushing back against the idea that recent developments signal de-escalation. In fact, price action suggests the opposite. Despite attempts to frame the situation as manageable and short-lived, the tone of recent messaging reflects heightened tensions, reinforcing the likelihood of further escalation rather than resolution. Rising geopolitical risk is now clearly being reflected in markets, helping explain the current configuration: oil higher, equities lower and the dollar stronger. Investors are focusing less on the rhetoric of a quick resolution and more on the implications of what comes next. The key question is no longer whether tensions ease, but whether the next phase of the regional instability will involve direct disruption to energy infrastructure or prolonged instability in the Strait of Hormuz. Given the strategic significance of key actors, markets are increasingly pricing in the probability that disruptions to energy flows will persist. Instead, the approach appears to be centred on maximising economic pressure by constraining global energy supplies.

The latest developments in the Middle East mark a tentative but meaningful shift in the trajectory of the regional tensions, with reports of a two-week ceasefire agreement suggesting that the situation may have reached peak escalation. While this does not guarantee a lasting resolution, it provides stakeholders with a potential off-ramp and has already begun to ease some of the immediate pressure on global markets, particularly in energy.