When the winds change: stocks rise, gold struggles and the dollar raises its head again

In recent days, financial markets have experienced a phase that, despite the uncertainties, shows signs of consolidation. Several parallel threads are intertwined: renewed confidence in stocks, the strengthening of geopolitical measures toward Russia, the cautious but not alarmist tone of major central bankers, the decline of gold (and silver) as safe-haven assets, and the return of the US dollar after a period of weakness. Let's look at "the story behind the numbers."

1. Solid growth in stocks thanks to US-China agreements

The first impetus came from the repositioning between the United States and China: a meeting between Donald Trump and Xi Jinping raised confidence that the trade conflict could ease. According to a recent study, the global dollar index reached 99.80 after the Federal Reserve chairman toned down excessive expectations of rate cuts, but this is also part of the "reducing geopolitical risk" effect that has fueled equity assets. Specifically, US and global stock markets have risen, driven in part by the US consumer/retail sector, which has benefited from the signal of a "reducing trade war." This increase in confidence is resulting in a beacon effect: those who were too conservative in their equity positions may have begun to increase their exposure, generating a momentum effect.

2. Trump, Europe and China: Russia's growing isolation

The message for markets: Russia is increasingly isolated in its energy and financial sectors. This has two significant effects on the financial world: (a) it reduces one source of geopolitical uncertainty—because the "worst-case scenario" (a generalized escalation) appears less likely; (b) it opens up space for a normalization of global trade and investment, which had been held back since the outbreak of the Russian-Ukrainian conflict. In the equity market, this "external" contribution to reducing geopolitical risk adds to the US-China trade factor: thus, equities have received a double boost.

3. Cautious but reassuring speeches from central banks

On the monetary policy front, central banks in major economies are adopting a tone that is neither alarmist nor overly expansionary: the Fed cut rates as expected, but Chairman Powell stated that the market may have overestimated the speed of further reductions. This translates into a dual effect: on the one hand, the downward pressure on rates creates a favorable environment for equities; on the other, the "moderation" indicates that a recession is not expected imminently (at least according to central bankers). The tone is therefore reassuring: "We are not on the brink, but we remain cautious." This type of communication helps reduce fear and thus encourage a resumption of risky allocations.

4. Further proof: massive realization – who sold gold and silver

An interesting consequence concerns precious metals: the quintessential safe-haven asset, gold, has undergone a correction after a rally that had driven prices to historic highs. Over the past 12 months, gold had gained nearly 60% to over $4,398/oz. The fact that investors have begun selling gold and silver is telling: it indicates that risk perception has diminished, and that traders are shifting capital from "insurance" (gold) to "risk" (stocks). This movement reinforces the idea that equities could benefit, and creates a more "normal" scenario for the market: not a flight from risk, but a return to assets more correlated with growth.

5. The dollar has started to rise again, albeit timidly

Finally, on the currency front, the dollar has begun to show signs of strength. The US dollar index (DXY) rose above 99.80 following the Fed's comments. The exchange rate against the yen reached around 154, strengthening the dollar. This rebound is consistent with a context of reduced perceived risk (less of a crisis) and expectations that US interest rates will remain less aggressive.