Weekly Outlook: A Critical Window for the US-Iran Ceasefire—Can Gold’s Stalemate Be Broken by the PCE?

US-Iran talks are again approaching a critical window. With Powell at the helm of the Fed, layered with the PCE test, will gold be able to break the deadlock? Dollar undercurrents are surging, and US stocks next week could face major turbulence…

Over the past five trading days, market participants have endured rollercoaster-like swings in sentiment—struggling to move forward amid sharp oscillations between extreme panic and sudden euphoria.

At the start of this week, due to the US firmly rejecting Iran’s initial diplomatic proposal, the market fell into intense anxiety. This move caused crude oil prices to spike instantly and raised the threat of a serious rebound in inflation pressures.

Intertwined with these geopolitical concerns is the fierce repricing of hawkish monetary policy. After Worsh was officially confirmed as the Fed Chair, institutional funds rushed to place bets frantically in anticipation of a new era of aggressive and stringent balance-sheet reduction.

This emerging trading pattern has unleashed a wave of relentless shock. Under the heavy pressure of soaring global bond yields, global equities and precious metals were at times severely suppressed.

However, just when technical formations appeared at their bleakest, the market narrative underwent a complete reversal.

Driven by strategic mediation in the Middle East, a highly promising path to peace suddenly emerged. As this breakthrough approached the weekend, it triggered a large-scale risk-on, corrective rebound.

As the haze of geopolitics finally begins to clear, traders are massively readjusting their portfolios, building momentum for the critical bets next week on global stability. Below are the key points the market will focus on in the new week (all times Beijing time):

Major Event: Is the US-Iran Agreement Moving Toward “Phase Results”?

Signals of negotiation progress were released on Saturday by Iran, the US, Pakistan, and multiple foreign media outlets—showing that the parties are pushing toward phased results in a conflict that has lasted nearly three months.

On social media, Trump said he had “very good calls” at the White House Oval Office with leaders from Saudi Arabia, the UAE, Qatar, Pakistan, Turkey, Egypt, Jordan, Bahrain, and others regarding Iran and a memorandum of understanding on peace. Trump said the agreement has been essentially negotiated and is awaiting final confirmation by the US, Iran, and other relevant countries.

In addition, his call with Israeli Prime Minister Netanyahu was “also very smooth.” The final details of the agreement are being discussed and will be announced soon. Trump specifically pointed out that, apart from multiple items in the agreement, the Strait of Hormuz will be opened.

According to The New York Times, two US officials revealed that a key element of the proposed Iran-US agreement is Tehran’s explicit commitment to give up its high-enriched uranium stockpile, though the report has not been confirmed. Based on Iran’s previous stance, these issues are unlikely to be resolved in detail. Under the letter of intent, both sides agree to end the war and commit to deeper negotiations over 30 days.

Iran’s Ministry of Foreign Affairs said that after meetings between chief negotiator Kalibaf, Foreign Minister Araghchi, and Pakistan’s Army Chief Munir, Tehran has shifted its focus to finalizing the details of a memorandum of understanding. Iranian state media said that before Munir left Tehran, he also met with Iranian President Pezeshkian. Pakistan’s military also said that in the past 24 hours, consultations have made “encouraging” progress toward reaching a final consensus.

US Secretary of State Rubio, who is visiting India, said that the relevant work is still ongoing and hinted that the US may announce progress within a few days.

Xinhua, citing Bagheri, a spokesperson for Iran’s Ministry of Foreign Affairs, reported that the focus of current negotiations is to end the “imposed war,” rather than advancing nuclear issues. Bagheri said in an interview with Iranian media that Iran and the US are finalizing a memorandum of understanding containing 14 items. At this stage, there will be no specific arrangements involving nuclear issues or related sanctions relief, but Iran’s demand for sanctions removal—especially the release of frozen assets—has been included in the document. He explained that Iran has put off discussions on nuclear issues because the topic has been used twice as a pretext to launch a war against Iran.

Bagheri noted that Tehran is currently prioritizing the end of “wars on all fronts,” including in Lebanon, and plans to move into nuclear negotiations in the next phase 30 days or 60 days later. He said disputes have decreased this week, but there are still issues that need to be discussed through the mediation party, and developments over the next three to four days are worth watching. He also emphasized that although the US blockade of Iranian shipping is important, the immediate priority is to reduce the risk of the US launching strikes again and to help cool down the conflict in Lebanon.

Kalibaf said Iran will uphold its “legitimate rights” on both military and diplomatic levels and questioned the other side’s lack of sincerity in negotiations. He warned that Iran’s armed forces have restored their capabilities during the ceasefire, and that if the US restarts hostilities, the consequences will be more intense and more tragic than during the initial stage of the conflict.

The New York Times also disclosed that two Israeli defense officials said Israel has been clearly sidelined by the Trump administration and has almost been excluded from decision-making in the US-Iran ceasefire negotiations. Trump, meanwhile, believes that Netanyahu is actually the party that needs restraint in resolving the conflict.

Regarding gold, Kevin Grady, President of Phoenix Futures and Options, believes that given current trading volume, Iran-related headline risks, the upcoming long weekend, and the shorter trading week, investors are advised not to rush into positions in the short term.

“I’ve been emphasizing this, but if you look at the charts, prices aren’t really moving,” Grady said. “The gold market has very little interest. I think everyone is in a wait-and-see mode. Not many people are actively trading; and those who are trading are mainly doing spreads, rolling positions from the June contract into the August contract.”

Grady said that because futures trading volume is so light, traders should be cautious about establishing any directional positions, since they may not be able to close positions smoothly. He also believes that in the short term, gold will remain range-bound, and until there is a breakthrough in Middle East developments, he does not expect gold to show any sustained upward momentum.

“Every rebound seems to be sold,” he said. “Right now, we’re in a market like this, we can only wait. Everyone is frustrated and can only say, ‘Hey, we can only wait. Nothing has changed. We are all waiting on the Iran issue and waiting for a solution.’ We’re all in the same situation.”

Central Bank Watch: Traders Start Pricing in Fed Rate Hikes This Year

Federal Reserve:

On Thursday 20:55, FOMC permanent voting member and New York Fed President Williams delivered a keynote speech at a meeting organized with participation from the Central Bank of Iceland;

On Thursday 22:15, 2028 FOMC voting member and St. Louis Fed President Musalem delivered remarks;

On Friday 18:50, 2028 FOMC voting member and Kansas City Fed President Schmidtt delivered remarks;

On Friday 21:10, Fed Governor Bowman delivered remarks.

On Friday, Kevin Worsh was sworn in as Fed Chair at the White House. Nick Timiraos, known as the “Fed’s stenographer,” posted that there were several key moments during the swearing-in ceremony:

1. Trump asked Worsh to be “completely independent.” Trump said, “(I hope he) doesn’t look at me, and doesn’t look at anyone else.”

2. Just two minutes later, Trump also offered some “suggestions,” explaining the economic direction he wants: “Strong economic growth doesn’t need to be cooled down,” “Economic growth does not mean inflation,” and “I hope the economy thrives and reaches unprecedented levels, because there are indeed some debts that need to be handled.”

3. Trump hinted that the Fed’s decision-makers will “converge.” He said that other Fed policymakers “will make their own decisions, but they will listen to Kevin’s opinions throughout,” even those “with slightly different stances.”

4. Worsh mentioned Greenspan rather than Bernanke. Worsh looked back on history—Greenspan’s scene when he was sworn in at the White House in 1987—and promised to “carry out the work with full energy and a sense of mission, just like Chairman Greenspan.” He did not mention his previous five-year tenure as a Fed Governor working with former Chair Bernanke.

However, at the moment Worsh took office, risks were highly concentrated. Inflation is rising, long-term US Treasury yields are climbing, and more and more investors believe the Fed’s next move may not be rate cuts that Trump wants, but rate hikes.

A key point driving this shift in expectations came after a speech by Fed Governor Waller. As one of the relatively dovish members over the past year, he explicitly said on Friday that, based on the current inflation trajectory, the next policy statement should “clearly indicate that the likelihood of future rate cuts is no greater than the likelihood of rate hikes.” This remark directly prompted traders to increase their bets on rate hikes.

The interest rate swap market then repriced accordingly. The market currently expects that by the end of 2026, the Fed’s benchmark policy target range will be at least raised by 25 basis points from the current 3.50% to 3.75% level—marking the first time this view has been fully priced into the market.

Krishna Guha, Head of Economics and Central Bank Strategy at Evercore ISI, said: “Waller’s latest remarks confirm a hawkish shift within the Fed. His discussion of inflation carries an all-around hawkish tone.” This assessment aligns with the recent changes in the overall atmosphere of policy discussions.

Looking ahead to next week, many Fed officials will also deliver public speeches. Investors can continue to monitor their remarks to judge whether hawkish sentiment within the Fed has gained the upper hand.

Other Central Banks:

On Wednesday 08:00, Bank of Japan Governor Ueda Kazuo will speak at a monetary policy meeting hosted by the Bank of Japan;

On Wednesday 10:00, the Reserve Bank of New Zealand will release its interest rate decision and monetary policy statement;

On Wednesday 11:00, RBNZ Chair Breeman will hold a press conference on monetary policy;

On Thursday 19:30, the European Central Bank will publish the minutes of its April monetary policy meeting;

On Friday 16:20, Bank of England Governor Bailey will speak.

Next Wednesday, the RBNZ will hold a monetary policy meeting. At the previous meeting, policymakers decided to keep the Official Cash Rate (OCR) unchanged at 2.25%, but expressed concerns about the impact of the Middle East situation on inflation and economic growth, and signaled that they are prepared to take “decisive” action if price pressures intensify.

This was interpreted by the market as a “hawkish hold.” Combined with the acceleration of 1-year and 2-year inflation expectations, investors are increasingly confident that the RBNZ may need to hike rates by roughly three rounds of 25 basis points before the end of the year. Although the probability of action at this meeting is only 25%, the probability of a rate hike at the July meeting has surged to 80%.

Therefore, if the RBNZ again stays put while using hawkish language, it could effectively lock in market expectations for a July hike, and in turn could support the New Zealand dollar.

Key Data: US PCE Data Coming Soon—Can Tokyo CPI Data Ease Intervention Pressure?

On Tuesday 18:00, UK May CBI Retail Sales balance;

On Tuesday 21:00, US March FHFA House Price Index MoM and US March S&P/CS 20 City House Price Index YoY;

On Tuesday 22:00, US May Conference Board Consumer Confidence Index;

On Tuesday 22:30, US May Dallas Fed Business Activity Index;

On Wednesday 09:30, Australia April CPI YoY;

On Wednesday 16:00, Switzerland May ZEW Investor Confidence Index;

On Wednesday 20:15, US weekly ADP employment change through May 9;

On Wednesday 22:00, US May Richmond Fed Manufacturing Index;

On Thursday 04:30, US weekly API crude oil inventories through May 22;

On Thursday 17:00, Eurozone May Industrial Sentiment Index and Eurozone May Economic Sentiment Index;

On Thursday 19:30, ECB will publish the minutes of its April monetary policy meeting;

On Thursday 20:30, Canada Q1 current account; US weekly initial jobless claims through May 23; US April Core PCE Price Index YoY; US April personal spending MoM; US Q1 real GDP annualized QoQ revision; US April Core PCE Price Index MoM; and US April durable goods orders MoM;

On Thursday 22:00, US April new home sales, annualized;

On Thursday 22:30, US weekly EIA natural gas inventories through May 22;

On Friday 00:00, US weekly EIA crude oil inventories; US weekly EIA Cushing crude oil inventories; and US weekly EIA strategic petroleum reserve inventories through May 22;

On Friday 07:30, Japan April unemployment rate;

On Friday 14:45, France May CPI preliminary monthly and France Q1 GDP final annual;

On Friday 15:00, Switzerland May KOF leading indicator;

On Friday 15:55, Germany May seasonally adjusted unemployment count and Germany May seasonally adjusted unemployment rate;

On Friday 20:00, Germany May CPI preliminary monthly;

On Friday 20:30, Canada March GDP MoM;

On Friday 21:45, US May Chicago PMI data.

At present, many market analysts believe that even if oil prices do not rise further, inflation in the US may still stay elevated. That’s because the annual inflation rate is calculated based on current prices compared with one year ago, when the base was much lower. Therefore, if subsequent data continues to validate this trend, investors may further bring forward the expected timing of Fed rate hikes.

Given the factors above, the April Core PCE Price Index to be released next Thursday— the Fed’s most preferred inflation gauge—will be closely watched. On the same day, the US will also publish April personal income and outlays data and the second estimate of Q1 GDP. Since the month’s CPI and PPI data came in hotter than expected, the risks for the PCE index may lean upward.

If PCE growth exceeds expectations, combined with strong economic growth data, it could further reinforce the case for rate hikes this year and potentially push the US dollar higher, especially if US-Iran peace negotiations again fall into a stalemate—making the dollar’s rise even more pronounced.

Australia’s CPI Could Inject New Momentum for the RBA

On Wednesday, Australia will release its April CPI inflation data. The RBA has already raised rates three times. While it seems willing to pause tightening temporarily, based on Australian overnight index swap data, the market expects there is still about 70 basis points of room for further hikes by the end of 2026.

Australia’s March CPI YoY jumped from 3.7% to 4.6%. If inflation accelerates further, traders may place more aggressive bets on the rate-hike path, injecting momentum into AUD strength. After all, the RBA’s inflation target range is 2% to 3%, and current CPI growth is already well above that upper bound.

The Yen Waits for Tokyo CPI Data to Ease Intervention Pressure

Turning to Japan, next week’s focus is undoubtedly the May Tokyo CPI report, along with April industrial output and employment data released on the same day.

Despite Japan’s recent intervention attempts, the yen against the US dollar remains on the defensive, with the USD/JPY exchange rate once again returning to the 158 to 160 range. In this sensitive zone, Finance Minister Katayama often reiterates the authorities’ willingness to implement official interventions in a more prominent manner.

If Tokyo CPI growth shows an uptick, it could increase the likelihood of the Bank of Japan raising rates at its upcoming meeting and raise the probability of further tightening actions over the coming months. According to data from the Japanese Overnight Index Swap (OIS), the probability of a rate hike on June 16 has reached 75%, and the market has nearly fully priced in an additional hike before year-end.

Rising expectations for rate hikes are expected to support the yen and correspondingly reduce the risk of official intervention. However, if the BOJ truly wants to help any potential intervention achieve the expected effect and avoid further speculative sell-offs of the yen, it must roll out policy measures that meet market expectations.

Inflation Data from Italy, France, and Germany; Canada GDP Is Due Next Week

Next Friday, Italy, France, and Germany will release preliminary May CPI figures, providing early signals for the eurozone’s inflation trajectory. Eurozone-wide CPI data will be released on June 2.

Currently, market expectations suggest the ECB will press the button for a rate hike in the upcoming meeting, with further potential total hikes of about 40 basis points thereafter. The worsening risk of inflation running out of control could force a more hawkish interest-rate path, but whether this can truly lift the euro remains to be seen.

Although markets expect the ECB’s pace of rate hikes to be more aggressive than the Fed’s, at the same time, the eurozone economy appears to be hit harder by the current energy crisis and Middle East situation. Persistently weak PMI data confirms this: the eurozone May composite PMI preliminary reading has slid further from 48.8 into the contraction zone, falling to 47.5.

In addition, Canada’s Q1 and March GDP data will be released next Friday. Against the backdrop of Middle East geopolitical turmoil, the Canadian dollar has held up relatively well, possibly supported by climbing oil prices. After all, Canada is the world’s fourth-largest crude oil exporter. Therefore, if the data shows Canada’s economy remains resilient amid the chaos, the CAD could receive further support.

Corporate Earnings: Will US Stocks Face Major Turbulence?

As investors contend with a backdrop of surging inflation and rising US Treasury yields, lofty US stock valuations in the final days of earnings season may face volatility.

Anthony Saglimbene, Chief Market Strategist at Ameriprise, said strong earnings have led investors to overlook negative factors such as rising yields, soaring oil prices, and the ongoing US-Iran war, but “the earnings season is basically over now.”

“Investors have largely gotten past earnings season, and the macro environment is starting to take up a more important position,” Saglimbene said. Because next Monday is Memorial Day, trading next week will be shorter.

According to London Stock Exchange Group’s IBES data, with more than 90% of S&P 500 index constituent companies having reported results, overall first-quarter earnings are expected to grow by 29% year over year.

Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute, said: “I think market expectations for earnings and economic growth are quite high, and that has already been reflected in current stock prices.”

Several major US retailers, including Costco, Best Buy, and Dollar Tree, will report earnings in the coming week. Investors are looking for signs that high gasoline prices may be eating into other consumer spending.

Artificial intelligence has been a key factor driving both the stock market and earnings growth. Salesforce’s results as a cloud software provider will also be a focus.

Nvidia, a chipmaker, earlier forecasted revenues of $91 billion—exceeding Wall Street expectations—and its performance is seen as a barometer of the health of the AI market.

Brock Weimer, an investment strategist at Edward Jones, said: “Nvidia’s results help reinforce that the strong trend of AI-related spending remains intact.”

Market Closure Reminders:

On Monday (May 25), due to Memorial Day, US stock markets will be closed for one day. Trading in COMEX precious metals and crude oil futures contracts will be suspended at 02:30 Beijing time on May 26; trading in US stocks and US bond futures contracts will be suspended at 01:00 Beijing time on May 26. ICE Brent crude oil futures contracts will end early at 01:30 Beijing time on May 26.

Additionally, the London Stock Exchange will be closed for the Spring Bank Holiday for one day; the Seoul Stock Exchange in South Korea will be closed for the Buddha’s Birthday holiday for one day; and the Hong Kong Exchanges and Clearing will be closed for Buddha’s Day with Southbound and Northbound trading suspended.

On Thursday (May 28), the National Stock Exchange of India will be closed for Eid al-Fitr for one day.