In July, global markets remained volatile amid competing drivers: recurring US–Iran geopolitical tensions, repricing of Fed policy expectations, and a heavy slate of earnings releases. Compared with June, the marginal impact of US–Iran developments on oil, gold, and global equities faded materially, with asset pricing pivoting to US inflation and monetary policy expectations. Gold traded in a narrow $4,000–$4,100 range throughout the month, awaiting a directional catalyst.
Early July saw renewed escalation in the Strait of Hormuz, with US strikes on Iranian targets effectively nullifying the June temporary ceasefire memorandum. Oil spiked, reigniting inflation concerns; US real yields and the dollar strengthened in tandem, pressuring gold toward $4,000. By mid-to-late July, US–Iran diplomatic talks resumed under an Oman-led shipping understanding framework. Oil retreated from highs, inflation expectations eased, and June CPI/PCE prints came in below consensus, prompting markets to dial back rate-hike bets and lifting gold back toward $4,100. The Fed held rates steady in July, though hawkish voices grew: three voting members backed a 25bp hike. One governor favored less active intervention, preferring market-driven tightening. With inflation still above target, concerns over insufficient disinflationary resolve have weakened policy credibility, bolstering medium-term inflation-hedge demand and underpinning gold.
Domestically, June’s softer-than-expected social financing and loan growth constrained risk assets in July. Weak financing reflected sluggish traditional-sector demand: lower government bond issuance and household lending, tepid property and auto recovery, and mild deleveraging. Corporate credit demand remained subdued, supported only by bill financing. The widening M1–M2 gap signaled weak real-economy demand and operating cash flows. H1 GDP grew 4.7% YoY, but Q2 slowed markedly on external energy shocks, weak domestic demand, and fading policy tailwinds, heightening expectations for further stimulus.
Global equities remained sharply bifurcated. US Q2 earnings highlighted AI divergence: cloud leaders beat, while consumer electronics and memory chips lagged on weak end-demand. Funds rotated between high-growth AI and undervalued resources. Japanese and Korean memory stocks, previously buoyed by price-hike expectations, saw profit-taking post-earnings.
In August, catalysts shifted. US July nonfarm payrolls missed badly, with a net loss of 23k jobs and downward revisions to prior months, signaling labor market cooling. Concurrent central bank gold buying (China, Korea, Russia) and persistent ETF inflows propelled gold above $4,300, lifting miners. Copper surged on low visible inventories and DRC export restrictions, nearing record highs. We maintain core positions in base metals and mining, while tactically increasing flexible trading across other sectors to broaden research coverage alongside precious and base metals themes.