Core Viewpoint - Citigroup has upgraded its rating on emerging market local currency sovereign bonds to "overweight," betting on declining interest rates and a weakening dollar [1] Group 1: Economic Indicators - Analysts Dirk Willer and Adam Pickett noted early signs of tariff transmission effects in the U.S. June inflation data, but a slowdown in service prices may keep inflation under control [1] - The potential for the Federal Reserve to restart a loosening cycle in the second half of 2025 is highlighted, which typically benefits emerging markets [1]

Core Viewpoint - The recent rebound in gold prices is primarily driven by significant fluctuations in Asian currencies, which aligns with risk-averse behavior in the market [1] Group 1: Market Dynamics - Analyst Giuseppe Dellamotta notes that gold has recovered its losses from the previous week, although the exact catalysts remain unclear [1] - The volatility in Asian currencies provides a plausible explanation for the timing of gold's rebound and fits the logic of seeking safe-haven assets [1] Group 2: Future Outlook - As authorities begin to intervene in the currency markets, the demand for safe-haven assets may gradually decrease [1] - The upcoming Federal Open Market Committee (FOMC) decision from the Federal Reserve poses a risk for gold bulls, as the market has aggressively bet on a dovish shift [1] - There is a possibility that the Federal Reserve may issue hawkish signals to correct market expectations, which could impact gold prices [1] Group 3: Long-term vs Short-term Trends - In the medium to long term, the upward trend for gold remains intact, with expectations of continued low real yields during the Federal Reserve's easing cycle [1] - Short-term risks are present; positive developments in trade tensions or a hawkish stance from the Federal Reserve could lead to a market re-evaluation and further pullback in gold prices [1]