Core Viewpoint - The uncertainty surrounding the U.S. tariff policy is causing significant turmoil in global markets, with mixed signals from the Trump administration leading to confusion about the effective dates of tariffs [1][13]. Market Reactions - Asian stock markets mostly declined, with the Nikkei 225 and Thailand's SET index both dropping approximately 0.5%. The MSCI Asia-Pacific index fell by 0.6% [1]. - U.S. stock index futures also faced pressure, with the S&P 500 and Nasdaq 100 futures both down about 0.5% [1]. - Commodity prices generally decreased, with gold dropping over $20 to $3314 per ounce, and copper falling for the third consecutive day to $9821 per ton [1][6]. Commodity Market Impact - The uncertainty in trade policies has led to widespread declines in commodity prices, with iron ore prices in Singapore down 0.3% to $95.60 per ton, and futures for steel in Dalian and Shanghai also declining [6]. - Brent crude oil prices fell by 0.6% to $67.8 per barrel, while WTI crude oil prices decreased by 1.4% to $64.7 per barrel, influenced by both tariff policies and OPEC+ decisions to increase production [7]. Bond Market Response - There was an increase in demand for safe-haven bonds, with the yield on 10-year U.S. Treasury bonds dropping nearly 2 basis points to 4.326% [10]. - The U.S. dollar index slightly rose to 97.071, while the euro to dollar exchange rate remained stable at 1.1771, close to last week's high of 1.1830 [10].

Core Viewpoint - The market shows a clear divide regarding the future trajectory of gold prices, which are currently at historical highs around $3,300 per ounce, with expectations of a potential decline due to improved global economic outlook and reduced geopolitical tensions in the Middle East [1][4][10]. Price Trends - As of July 2, 2025, spot gold prices have slightly increased to $3,347.4 per ounce, while COMEX gold prices are around $3,350 per ounce [1][4]. - Since reaching a peak of $3,500 per ounce on April 22, 2025, gold prices have stabilized around $3,300 per ounce [4][11]. ETF Flows - In May 2025, global physical gold ETFs experienced a net outflow of approximately $1.8 billion, marking the first monthly outflow since November 2024 [4][9]. - North America faced the most significant impact, with ETF outflows of about $1.5 billion, while Asia saw outflows of approximately $489 million, primarily due to reduced demand in China [6][7]. Regional Analysis - Europe recorded a modest inflow of about $225 million, driven by the French market, which offset outflows from Germany and the UK [7]. - The "other regions" category experienced a small outflow of about $27 million, ending a five-month inflow streak, mainly from Australia and South Africa [8]. Future Price Predictions - Citigroup forecasts that gold prices may decline to between $2,500 and $2,700 per ounce by the second half of 2026, citing reduced investment demand and improved economic conditions [10][11]. - Other institutions, such as Morgan Stanley and Goldman Sachs, maintain a more optimistic outlook, predicting prices could reach $6,000 and $3,700 per ounce, respectively, by the end of 2025 [12]. Market Sentiment - Despite the recent outflows, the World Gold Council notes that global gold ETFs have seen a net inflow of about $30 billion since the beginning of 2025, with total holdings increasing by 322 tons [9][13].

Group 1 - Citi forecasts that gold prices will decline due to easing geopolitical tensions in the Middle East and improving global economic growth prospects, expecting prices to fall to $2500 to $2700 per ounce by the second half of 2026 [1] - In the third quarter, gold prices are expected to stabilize between $3100 and $3500 per ounce, with the supply-demand gap in the gold market peaking during this period [1] - Citi has shifted its outlook from bullish to bearish on gold, advising mining companies to take protective measures against potential price declines [1] Group 2 - Citi anticipates that the Federal Reserve will implement three rate cuts in 2025, which could impact gold prices as they typically have an inverse relationship with interest rates [3] - Other institutions remain optimistic about gold, with Morgan Stanley predicting prices could reach $6000 per ounce by 2029, requiring an 80% increase from current levels [4] - Goldman Sachs projects that gold prices will rise to $3700 per ounce by the end of 2025, with Bank of America also forecasting prices to exceed $4000 per ounce by the same time [4]

Group 1 - The central bank of Indonesia maintains the global economic growth outlook at 3% for 2025 [1]

Core Viewpoint - The recent volatility in the precious metals market, particularly gold, is influenced by multiple factors including a weakening dollar, changing risk sentiment, and developments in US-China trade negotiations [1] Group 1: Dollar Weakness and Gold Prices - The weakening of the dollar index has created favorable conditions for a rebound in gold prices, making gold cheaper for holders of other currencies [3] - Uncertainty surrounding the Federal Reserve's monetary policy has further exacerbated the dollar's weakness, leading investors to reassess the value of dollar-denominated assets and shift some funds towards traditional safe-haven assets like gold [3] - Concerns about global economic growth, driven by trade tensions and geopolitical issues, have put additional pressure on the dollar, supporting the rise in gold prices [3] Group 2: Risk Sentiment and Gold Demand - The escalation of geopolitical risks has increased demand for safe-haven assets, with gold being favored in the current environment due to ongoing conflicts such as the Ukraine-Russia situation [4] - Developments in US-China trade relations significantly impact risk sentiment; easing tensions can lead to a shift towards riskier assets, while heightened trade friction tends to boost gold prices due to increased safe-haven demand [4] - Central banks around the world are increasing their gold reserves, reflecting a structural change in demand for safe-haven assets, which provides a stable foundation for the gold market and supports long-term price stability [4]

Core Insights - Geopolitical factors, trade tensions, and the unpredictability of U.S. government policies are determining the global environment [1] - These factors have a decisive impact on global economic growth prospects and pose risks to the stability of the financial system [1] - Higher tariffs are expected to primarily affect the United States, with lesser impacts on the Eurozone and Spain [1]

Core Viewpoint - The comments from European Central Bank Governing Council member Escrivá highlight that various factors are critically influencing the global economic growth outlook and pose risks to the stability of the financial system [1] Group 1 - The global economic growth outlook is significantly affected by multiple factors [1] - Financial system stability is at risk due to these influencing factors [1]

Investment Rating - The report has downgraded the 0-3 month target price for gold to $3,150/oz from the previous target of $3,500/oz, expecting gold prices to consolidate in the range of $3,000-3,300/oz over the coming months [1][11]. Core Insights - Gold prices reached record highs in late April, driven by strong demand, particularly from ETFs in both China and other markets, with a significant increase in gold investment demand estimated at approximately $400 billion annually [5][7][30]. - The report identifies three key drivers of gold demand: deterioration in global growth prospects due to tariff shocks, diversification of foreign reserves towards gold, and rising concerns over currency debasement in the US and China [6][25]. - The report anticipates a physical market deficit for gold, with investment demand expected to exceed 100% of mine supply during 2Q'25, which historically correlates with price increases [35][77]. Summary by Sections Gold Prices and Market Dynamics - Gold prices are expected to consolidate after a significant rally, with the report noting that the recent price surge was largely influenced by tariff-related concerns [11][41]. - The report highlights that gold's share in global central bank reserves has increased significantly, which may limit future demand for gold as central banks approach their target allocations [59][63]. Demand Analysis - The report indicates that gold jewelry demand has weakened, with a 19% decline in volume terms in 1Q'25 compared to the previous year, which may further impact gold prices [42][47]. - Central bank demand has been robust, particularly from emerging markets, contributing to the overall bullish sentiment for gold [60][77]. Investment Demand and Price Correlation - The relationship between gold prices and investment demand has been strong, with the report stating that for every 10% increase in net investment demand as a share of mine supply, gold prices rise by approximately $170/oz [84][88]. - The report emphasizes that the current high levels of gold prices are creating a unique opportunity for gold producers, as forward prices are significantly higher than spot prices, allowing for potential high margins [65][73].