The US dollar asserts strength as gold hits record highs, with the USD heading towards the 200-day moving average milestone.

VCsSuckMyLiquidity · 2026-01-12T11:09:53+00:00

The essay analyzes the current dynamics of financial markets, emphasizing the influence of monetary policy over geopolitical events. It highlights the divergence in monetary policy among central banks, particularly the potential for the US Federal Reserve to cut interest rates, which supports the dollar. The energy market faces challenges with declining oil prices, while gold prices rise due to safe-haven demand. Additionally, signs of a weakening labor market and decreasing inflation pressures are noted, which may influence future US monetary policy.

VCsSuckMyLiquidity

2026-01-12 11:09:53

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Monetary policy is the decisive factor

This week, the main driver of the financial markets is centered around monetary policy, rather than geopolitical events. Although recent steps taken by the government regarding Venezuela align with the security strategy announced last year, their direct impact on the US dollar’s value remains limited. Instead, the divergence in monetary policy directions among central banks is the real influential factor.

Most major central banks worldwide have concluded their easing cycles, but the US Federal Reserve still has the potential to cut interest rates by an additional 50 basis points in 2026 according to market forecasts. This creates a supportive momentum for the US dollar as other currencies weaken.

Commodity markets: A contrasting picture

The Dollar Index (DXY) started the new week with a strong rally, approaching the 200-day moving average, indicating the currency’s resilience. However, the energy and precious metals markets tell a completely different story.

Brent crude oil prices fell 2.4% to $59.80 per barrel, very close to the multi-year low of $58.40 recorded on April 9, 2025. This decline reflects concerns over global demand. Conversely, gold continues its upward trend, approaching the record high of $4,550 per ounce reached on December 26, 2025, showing that safe-haven demand remains strong.

The stock market remains lively with gains, while the bond market maintains stability. This balance suggests that investors are cautiously reassessing risks.

Labor market and inflation signals are calmer

Signs of weakening in the US labor market are becoming more evident, while inflation pressures seem to be gradually easing. This will be a key focus in the upcoming December ISM manufacturing report, especially as the main index is forecasted at 48.4 compared to 48.2 last month.

Sub-indicators will be very important for investors to monitor, particularly data on prices paid and employment. These figures will help clarify whether price pressures are truly cooling or if the risk of job losses is still increasing. The results are likely to guide market views on the next steps of US monetary policy.

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