Weekly Outlook (May 12–16, 2025)

As we begin a new week, we continue to observe volatile price movements in global markets. The week started with a critical political decision that we had anticipated! The U.S. has reduced tariffs on Chinese goods from 145% to 30%, while China lowered its tariffs on U.S. products from 125% to 10%. This development has boosted risk appetite in the markets, prompting investors to shift toward riskier assets and slightly diminishing the appeal of gold as a safe haven.

Macroeconomic Outlook

On May 7, 2025, the U.S. Federal Reserve held its Federal Open Market Committee (FOMC) meeting and decided to keep the policy interest rate unchanged in the 4.25%–4.50% range. This reflects a cautious stance in the face of ongoing economic uncertainties and risks. On the political front, Trump continues to urge the Fed for interest rate cuts. Meanwhile, the Fed revised its 2025 economic growth forecast from 2.1% to 1.7%, raised its core inflation forecast from 2.5% to 2.8%, and kept its unemployment expectation steady at 4.2%. Markets currently expect the Fed to deliver a total of 75 basis points in rate cuts throughout 2025. This expectation could strengthen if economic conditions deteriorate further.

Geopolitical Outlook

On the geopolitical front, we are also entering a highly critical period. Direct Russia-Ukraine negotiations are scheduled to take place in Istanbul on May 15, 2025. Russian President Vladimir Putin announced a third ceasefire agreement with Ukraine and proposed starting talks without preconditions. Ukrainian President Volodymyr Zelensky responded positively, expressing readiness to participate in the talks.

Gold started 2025 at $2,625 per ounce and closed the first quarter at a record high of $3,125. Technically, gold prices holding above the $3,205 support level indicate a continuation of the upward trend. Macroeconomic factors such as the expectation of interest rate cuts continue to support demand for precious metals. However, if the Russia/Ukraine talks result in a lasting agreement and tariff uncertainties ease, we may see selling pressure push gold down toward the $3,200–$3,125 range. If this range is broken to the downside, psychological support at $3,000 could be tested.

In local markets, gram gold prices closed last week at TRY 4,200, but have since declined sharply to around TRY 4,090 at the start of the new week. In Turkey, spot premiums have risen by around $45 per ounce, while the price per kilogram shows a divergence of approximately $1,450 compared to the London market. This week, market attention will remain focused on U.S. inflation data, tariff developments, and the Russia/Ukraine peace talks.

According to the CME FedWatch Tool, the probability of a 100 basis point rate cut by December is currently priced at 32%.

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