Weekly Outlook (May 5–9, 2025)

As we begin the new week, we continue to observe volatile price movements in global markets. Last week, we closely followed several critical data releases from the U.S. On Tuesday, the Job Openings data from the U.S. came in below expectations, rising to around 7.192 million, signaling potential deterioration in employment. On Wednesday, the U.S. Q1 GDP data was released at -0.3%, also below expectations, slightly increasing recession fears in the U.S. economy. However, on the same day, the Core PCE (Personal Consumption Expenditures Price Index) came in at 2.6%, down from 3.0% the previous month, indicating that inflation is not accelerating rapidly—for now.

On Friday, critical U.S. labor market reports were released: unemployment remained steady at 4.2%, while Non-Farm Payrolls beat expectations at 177K. In summary, the macro data last week supported the notion that, while inflation is not rising, there are growing concerns over economic growth and employment—aligning with a potential case for Fed rate cuts.

This week, we are set to observe more critical data. On the first trading day, key inflation figures from Turkey came in below expectations. However, agricultural frost may contribute to inflation in May, so we might see inflation-supportive data in the coming period. This could delay the possibility of interest rate cuts. Today, the U.S. will release key PMI figures, which could trigger volatility in markets as they impact growth outlooks. On Wednesday, attention will turn to the Fed’s key interest rate decision. While no rate cut is expected this week, questions around the Trump-Fed tensions will likely remain in focus. Markets are currently pricing in three Fed rate cuts, with the first 25bps cut expected in July. Political pressure continues to increase the probability of rate cuts, which in turn supports gold prices.

On the political front, tariff uncertainties between Trump and China remain in focus. The Fed had previously raised its inflation expectation to 2.7% and lowered its growth forecast to 1.7% due to these tariff concerns. While U.S. stock markets have seen rapid capital outflows, this has pushed gold prices (per ounce) to record highs in precious metals markets.

As the new week begins, we continue to witness record pricing in gold. We have entered a week marked by rapidly increasing geopolitical risks. When Trump announced he had no plans to meet with the Chinese president, uncertainty returned to the markets, increasing risk appetite. Additionally, on May 5, Israel conducted simultaneous airstrikes on Yemen, Lebanon, Syria, and Gaza. This rise in geopolitical tensions triggered a sharp rally in gold prices.

Gold, which began 2025 at the $2,625 level, closed Q1 with a strong premium at a record $3,125. Technically, gold remains bullish above the $3,250 support level. Factors such as the economic slowdown from tariff developments, increased likelihood of Fed rate cuts, and heightened geopolitical risks continue to support gold prices.

In local markets, the price of gram gold in the Grand Bazaar closed last week at 4,085 TL. This week, upward momentum has accelerated, and we are observing prices around 4,180 TL. In Turkey, premiums on gold in USD terms have risen by about $50, and the difference per kilogram compared to the London market is around $1,600.

According to the CME Fed Watch Tool, there is currently a 37% probability priced in for a 100 basis point rate cut by December.