Last week, the first trading day of 2026, global financial markets opened with a cautiously optimistic sentiment: the US dollar rebounded slightly after weakening for most of 2025, with investors awaiting a flurry of US economic data (especially employment figures) next week to set the tone for the Federal Reserve's interest rate path; global stock markets greeted the new year with a strong performance, with several European stock indices hitting record highs, and Hong Kong and Indian stocks also showing significant gains. Meanwhile, US Treasury yields remained largely flat amid thin trading after the holidays, and Bitcoin continued its rebound, approaching the $90,000 mark, indicating that risk assets are increasingly sensitive to macroeconomic variables.

Overall, the asset performance on the first day of 2026 revealed a clear logical chain: global stock markets opened strongly amid a recovery in risk appetite, while the US dollar, US Treasuries, and crypto assets entered a phase of "awaiting confirmation from data and policy signals." In the coming week, three key variables—US employment data, expectations of a Federal Reserve rate cut, and the selection of the Federal Reserve Chair—will be crucial catalysts determining the direction of the US dollar, the performance of global risk assets, and capital flows.

Last Week's Market Performance Recap:

Last week, US stocks closed slightly higher on the first trading day of 2026, with a strong performance in the semiconductor sector being a key driver, helping the S&P 500 maintain its gains even after an intraday pullback. Data shows that the S&P 500 closed up 0.19% at 6,858.47 points; the Nasdaq Composite Index dipped slightly by 0.03% to 23,235.63 points; and the Dow Jones Industrial Average rose 319.10 points, or 0.66%, to close at 48,382.39 points. Notably, this positive start for the S&P 500 reversed the "first-day decline" trend of the past three years. Looking at a longer timeframe, since the 1950s, the probability of US stocks closing higher on the first trading day is approximately 48%, with no clear pattern to follow.

Gold closed near $4,330 on the first trading day of 2026, continuing its strongest annual rally in over four decades. The metal rose approximately 65% ​​last year, but the Chicago Mercantile Exchange Group raised margin requirements for gold and silver futures, a move that caused significant market volatility and may suppress further price increases in precious metals.

The spot silver market had a strong start to 2026. This surge builds on a more than 140% cumulative increase in silver prices in 2025, marking the largest annual gain since 1979. However, caution is mixed with the positive sentiment, with institutions warning of potential short-term position adjustments and liquidity risks.

The US dollar was around 98.40 on the first trading day of 2026, continuing its largest annual decline in eight years. The dollar's performance in 2025 was arguably its worst in nearly a decade, with a record annual decline. The dollar index fell by more than 8% throughout the year, not only erasing gains from previous quarters but also raising concerns among global investors and policymakers about the dollar's reserve currency status.

Ultimately, the medium- to long-term trend of the US dollar depends on whether the Federal Reserve will slow down or end its rate-cutting cycle, thus triggering a rebound, or whether it will continue to cut rates under pressure from the US government and the White House. Furthermore, the health of the US labor market is crucial; the minutes of the December FOMC meeting showed that the Fed chose to prioritize employment over inflation. Technically, the dollar index has rebounded above the halfway point of the previous red trading range and is above the 5-day moving average, showing signs of gradual strengthening, with resistance around 98.50.

On the first full trading day after the New Year, overall market trading was relatively quiet, with limited volatility in risk assets. However, the euro continued to decline against the dollar, trading around 1.1720. On the surface, this appears to be a typical "data-driven" correction; a deeper contradiction lies in the continued divergence between interest rate expectations and policy paths, which continues to strain the relative attractiveness of the dollar and the euro. The USD/JPY pair traded around 157.00 for the fourth consecutive day during the early European session on Friday, remaining in positive territory. The Bank of Japan's cautious pace of monetary tightening is putting pressure on the yen, leading to its weakness against the dollar.

The pound traded at $1.3455 against the dollar last week, marking a 7.5% appreciation against the dollar in 2025, its biggest annual gain since a 9.5% increase in 2017. The pound benefited from divergent expectations between the Bank of England and the Federal Reserve regarding interest rate cuts in 2026, as well as a relatively lackluster autumn budget, which eased pressure on the pound in the second half of the year. The Australian dollar rose to around $0.6698 on Friday, near a 14-month high, providing a positive start to the new year as investors awaited next week's monthly inflation data, which could influence the Reserve Bank of Australia's policy stance this year, suggesting a possible rate hike. A generally weaker dollar further supported the Australian dollar. The Australian dollar ended 2025 strongly, gaining nearly 8%, its strongest year since 2020.

Last week, WTI crude oil rebounded by about 1% to around $57.20 a barrel, with concerns about a global supply glut outweighing escalating geopolitical risks. As oil demand enters a seasonal slowdown, OPEC+ has issued cautious signals, with major oil-producing countries like Saudi Arabia expected to reiterate their decision to halt supply increases in the first quarter at their January 4th meeting. The global oil market will officially enter a clear oversupply cycle in 2026, with a loose supply-demand balance now a certainty. However, falling oil prices will accelerate oil company exits, while the chances of a rebound from oversold levels are also increasing.

After accumulating gains of over 100% in the past two years, Bitcoin failed to maintain its strength in 2025, disappointing many investors. Based on current trends, Bitcoin is expected to end 2025 in a "bear market," with a decline of approximately 6% for the year. This performance contrasts sharply with market expectations—especially after the start of Trump's second term in January, when he was dubbed the "crypto president," the market experienced a surge in cryptocurrency enthusiasm.

The yield on the 10-year US Treasury note remained around 4.2% on the first trading day of 2026, due to relatively quiet market activity during the holiday season. Investors continue to weigh the Federal Reserve's interest rate path this year and focus on upcoming economic data, including next week's December jobs report. The market is also watching the Fed leadership, as President Trump will appoint Powell's successor earlier this year, with speculation suggesting a dovish candidate may be chosen.

Market Outlook This Week This week (January 5-9), as the aftereffects of the US government shutdown gradually subside, a flurry of core economic data releases coupled with significant statements from Federal Reserve officials will create a crucial window for global markets to restructure policy expectations and verify economic momentum.

The US market will see two major data releases: the December CPI data will reveal the true trend of inflation. Given the distortion of housing cost statistics in November due to the shutdown, whether this data can confirm a downward trend in inflation is attracting significant attention.

Meanwhile, Neel Kashkari, a 2026 FOMC voting member and President of the Minneapolis Federal Reserve, will speak at the American Economic Association. His remarks warrant close attention—as a key official who has previously signaled a "dovish" stance, the core focus is on whether he might shift his position. His statements on inflation resilience and the threshold for interest rate cuts will directly influence market expectations regarding a shift in Federal Reserve policy.

Global Markets This week's core focus is the US December non-farm payroll data, a crucial release date that may trigger reactions across various investment instruments 1-2 days before Friday.

As the first normal monthly data release since the US government ended its shutdown on November 13th, its unemployment rate and wage growth performance are attracting significant attention. The controversy surrounding the previous December non-farm payroll data further fuels speculation about whether this data will show a reversal or continuation of previous trends.

Regarding this week's risks:

Risk Warning: Be wary of discrepancies between data credibility and policy expectations.

Besides core economic data, investors should focus on three major risks:

First, some US economic data still harbor potential statistical distortions. For example, the housing cost accounting method has not yet been clearly adjusted, and data interpretation errors may trigger short-term market fluctuations. Alternatively, due to the excessively low CPI last month, this month's CPI may experience a sharp rebound. Second, a divergence between Fed officials' speeches and data performance, such as Kashkari reiterating a "high threshold for rate cuts," could lead to sharp fluctuations in market interest rate pricing, affecting the interconnected trends of stocks, bonds, and currencies.

Third, given the backdrop of US political polarization and the controversy surrounding data credibility, significant discrepancies between non-farm payroll data and other employment indicators could exacerbate market uncertainty and amplify liquidity volatility risks.

This Week's Conclusion:

As 2025 draws to a close, global financial markets appear prosperous, but a chill can be felt beneath the surface. Many asset classes have risen only after significant previous declines. Despite the Fed's third consecutive rate cut earlier this month, investors have not celebrated a "partial victory" in the fight against inflation.

Looking ahead, global financial markets will enter a new phase. The divergence in policies among major central banks, rising geopolitical risks, and changes in the dollar system will all have a profound impact on the market. Investors need to adapt to these changes, adjust their investment strategies, and find a balance between risk and return.

Investors should closely monitor inflation data for January and February 2026 to observe whether the "tariff transmission effect" begins to be reflected in final consumer prices. The resilience of the labor market and the direction of the 10-year US Treasury yield will be key indicators for judging whether the Federal Reserve can successfully achieve a soft landing or is about to initiate a more tightening shift.

At this stage, the key word for the market in the coming months is undoubtedly "caution"—global financial markets are rapidly adapting to a new landscape where 3.5% is the new floor for interest rates, not a ceiling.

2026 2026 Global Financial Market Outlook

The global financial market in 2026 will present a new landscape characterized by "growth divergence, monetary easing, AI-driven growth, and asset divergence." Against the backdrop of a global economic slowdown to 3.1%, major economies will show significant divergence in growth performance: the US economy will grow by 2.4%, China by 4.7%, Europe by 1.25%, and Japan by a modest recovery to 0.8%. In terms of monetary policy, the Federal Reserve is expected to cut interest rates 2-3 times, totaling 50-75 basis points, while the European Central Bank will maintain its interest rate unchanged, the People's Bank of China will cut rates by 10-20 basis points, and the Bank of Japan will raise rates to 1.0%.

Growth Prospects and Risk Assessment of Major Economies

Global economic growth in 2026 will exhibit a "strong first, weak later" trend, with significant divergence in growth performance among major economies. According to the latest forecast from the International Monetary Fund (IMF), global economic growth will gradually slow from 3.3% in 2024 to 3.1% in 2026, with developed economies maintaining a growth center of around 1.5%, and emerging economies growing slightly faster. The World Bank's forecast is relatively conservative, projecting global economic growth of 2.7% in 2025.

The US economy is projected to grow by 2.4% in 2026, supported by easing labor supply pressures and accelerated AI-driven business investment. The core driver of US economic growth is investment in AI infrastructure, which is expected to contribute approximately 1% to 1.5% annually to US economic growth.

There is some divergence in China's economic growth forecast, but it generally remains within the range of 4.5%-4.8%. China's GDP growth rate is projected to reach 4.7% in 2026, with a shift in the economic growth structure. Domestic demand will become more important, while the contribution of exports to growth will weaken compared to 2025. The IMF forecasts China's economic growth rate at 4.5% in 2026, an upward revision of 0.3 percentage points.

The European economy is projected to grow by 1.25% in 2026. Moderate growth is expected, primarily supported by German fiscal stimulus and strong growth in Spain.

Japan's economy is projected to achieve a moderate recovery of 0.8% in 2026, supported by a rebound in consumption and the reopening of auto factories, but an aging population and high debt levels remain long-term constraints.

Emerging market economies are expected to grow by around 4% overall, but with significant divergence in performance. Asia is expected to perform relatively well, with GDP growth projected at 3.6%, driven by continued strong export momentum of technology products and rising memory chip prices. GDP growth in South Korea, Singapore, Malaysia, and India is likely to exceed market consensus, but GDP growth in Thailand and the Philippines may fall short of expectations.

Monetary Policy Divergence and Liquidity Environment

Global monetary policy will exhibit significant divergence in 2026, with differences in policy orientations among major central banks reshaping the global liquidity environment. The Federal Reserve is expected to cut interest rates 2-3 times in 2026, with a cumulative reduction of 50-75 basis points, lowering the target range for the policy rate to 3.00%-3.25%.

The European Central Bank is expected to... ECB will maintain its interest rates unchanged this year, with the deposit facility rate, main refinancing rate, and marginal lending facility rate remaining at 2.00%, 2.15%, and 2.40%, respectively. ECB President Christine Lagarde stated that although inflation has eased somewhat, vigilance is still needed, particularly as the decline in service sector inflation may be slower than expected.

The People's Bank of China (PBOC) expects to implement a moderately loose monetary policy in 2026, with 1-2 interest rate cuts totaling 10-20 basis points and 1-2 reserve requirement ratio (RRR) cuts totaling 50 basis points. The PBOC's Monetary Policy Committee, at its fourth-quarter meeting in 2025, explicitly stated its commitment to "enhancing the resilience of the foreign exchange market, stabilizing market expectations, preventing exchange rate overshooting risks, and maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level."

The Bank of Japan (BOJ) expects to continue its monetary policy normalization process in 2026, with the market anticipating an increase in interest rates from the current 0.75% to... 1.0%. Bank of Japan Governor Kazuo Ueda stated that if the economic trend meets expectations, the central bank will continue to raise interest rates, and the current real interest rate remains at an extremely low level.

The global liquidity environment is generally loose, but there are significant regional differences. The Federal Reserve's rate cut will alleviate global dollar liquidity pressures, which is conducive to capital inflows into emerging markets. The ECB's decision to maintain its interest rate will lead to a narrowing of the interest rate differential between Europe and the US, pushing the euro to appreciate against the dollar. China's moderately loose monetary policy will support the domestic economy while maintaining the basic stability of the RMB exchange rate. The Bank of Japan's rate hike process will have a certain impact on the global bond market, especially on institutional investors holding large amounts of Japanese government bonds.

Gold: Safe-haven demand and central bank gold purchases

The gold market will continue to be supported by factors such as central bank gold purchases, geopolitical risks, and a weakening dollar in 2026, and prices are expected to continue to rise. The gold price forecast for the end of 2026 has been revised upward to $5,000-$5,250 per ounce, which is still about 14% upside from the current level.

The main drivers of rising gold prices include:

Central bank gold demand remains strong, with purchases expected to remain robust in 2026, averaging 70 tons per month, contributing approximately 14 percentage points to the December 2026 gold price increase.

Geopolitical risks persist, including the Russia-Ukraine conflict, the Middle East situation, and US-China relations, providing support for safe-haven demand for gold. Global political and economic uncertainty will continue in 2026, particularly with changes in the US political landscape, European integration, and Asian security tensions potentially triggering market volatility.

A weakening US dollar is anticipated, with the Federal Reserve cutting interest rates and the global "de-dollarization" process establishing a long-term depreciation trend for the dollar, supporting gold prices. Several Wall Street banks, including Goldman Sachs and Deutsche Bank, predict that the dollar will resume its decline as the Federal Reserve continues to slightly lower interest rates next year.

Changes in inflation expectations, while global inflation has somewhat subsided, still carry the risk of a rebound. Particularly driven by factors such as energy prices, food prices, and labor costs, inflation may fluctuate, providing demand for gold as a hedge against inflation.

Technical analysis shows that after breaking through $4,000/oz in 2025, gold prices have a favorable technical pattern and are expected to continue rising in 2026. Key resistance levels are in the $5,000-$5,250/oz range, while support levels are around $3,800-$4,000/oz.

Other precious metals, such as silver, are also expected to benefit from increased industrial and investment demand. Silver is predicted to challenge $100/oz.

Crude Oil: Overall pessimistic outlook

The average price of Brent crude oil in 2026 is projected to be $54-$56/barrel, and WTI crude oil $50-$52/barrel, mainly due to a surge in production maintaining a large-scale oversupply of approximately 2 million barrels per day.

Key factors influencing crude oil prices include:

On the supply side, the effects of OPEC+ production cuts, US shale oil production, and Russian crude oil exports. In 2026, OPEC+ will suspend the lifting of its 1.65 million barrels per day (bpd) production cuts in the first quarter. The remaining 1.239 million bpd of the second tier of voluntary production cuts will not be lifted. US shale oil production is expected to continue to grow, but the growth rate may slow.

On the demand side, factors such as slowing global economic growth, accelerated energy transition, and the development of alternative energy sources will affect crude oil demand. In particular, the substitution of new energy sources will continue to advance in sectors such as transportation, industry, and power.

Geopolitical factors, such as the Russia-Ukraine conflict, the Middle East situation, and the Iranian nuclear issue, may all affect crude oil supply and trigger price fluctuations.

The natural gas market faces a complex environment. European natural gas prices are expected to remain relatively high due to the Russia-Ukraine conflict and energy security considerations. US natural gas prices are subject to greater volatility due to shale gas production and export demand. The Asian natural gas market benefits from economic growth and energy transition, with continued demand growth.

Foreign Exchange Market: Analysis of the US Dollar's Performance and Major Currency Pairs

The foreign exchange market in 2026 will feature a weakening US dollar and a divergence in non-US dollar currencies. The US dollar is expected to resume its downward trend next year as the Federal Reserve continues to lower interest rates. The dollar index is projected to fall by approximately 3% by the end of 2026.

The main drivers of the dollar's weakness include:

A shift in the Federal Reserve's monetary policy, with 2-3 rate cuts expected in 2026, lowering the target range for the federal funds rate to 3.00%-3.25%. This decline in US Treasury yields will weaken the dollar's attractiveness.

Slower US economic growth, while the US economy remains relatively resilient, is expected to slow from 2.5% in 2025 to 2.4% in 2026, weakening the support from economic fundamentals.

Concerns about the fiscal deficit, with the US fiscal deficit continuing to expand and debt levels rising, will put pressure on the dollar in the long term.

The global process of "de-dollarization," with the advancement of international trade diversification and reserve currency diversification, challenges the dollar's position in the international monetary system.

Conclusions and Outlook

The global financial market in 2026 will operate under a pattern of "growth divergence, monetary easing, AI-driven growth, and asset divergence," providing investors with abundant structural opportunities.

Key Judgments Summary:

Global economic growth will exhibit significant divergence: the US economy will grow by 2.4%, China by 4.7%, Europe by 1.25%, and Japan by a moderate recovery to 0.8%. Monetary policy divergence will reshape the global liquidity environment, with the Federal Reserve cutting rates 2-3 times, the ECB maintaining its rate, the People's Bank of China adopting moderate easing, and the Bank of Japan continuing to raise rates.

The stock market will continue its upward trend, with global equities expected to achieve returns of 13-15%. The bond market will generally benefit from expectations of interest rate cuts, but attention should be paid to the divergence in credit risk. The commodity market will show significant divergence, with gold prices expected to rise to $5,000-$5,250 per ounce, crude oil prices fluctuating in the $50-$55 per barrel range, and silver prices maintaining strength at $100 per ounce.

The weakening trend of the US dollar has been confirmed in the foreign exchange market, with the dollar index expected to fall by 3%. The euro is expected to rise to 1.20-1.25 against the dollar, while the RMB exchange rate is expected to fluctuate between 6.7 and 7.0.

Future Outlook:

Looking ahead to 2026 and beyond, global financial markets will continue to be influenced by long-term trends such as the AI ​​technological revolution, energy transition, and geopolitical restructuring. Investors need to remain sensitive to new technologies and trends while adhering to a long-term investment philosophy, seeking opportunities amidst volatility and pursuing returns amidst risk.

2026 will be a pivotal year for global financial markets, presenting both numerous challenges and significant opportunities. Successful investment strategies require in-depth research, prudent decision-making, and flexible adjustments to capture enduring value amidst a changing market.

2026 Bitcoin Market Outlook

As of December 31, 2025, the price of Bitcoin fluctuated between $87,000 and $88,000, down approximately 30% from its all-time high of $126,198 in October. The current price is at a critical technical level, facing a battle between multiple resistance and support levels.

Key Bitcoin Events in 2025:

The Bitcoin market experienced significant volatility in 2025, primarily influenced by the following key events:

Regulatory Breakthrough and Accelerated Institutional Adoption: On July 18, 2025, the US President signed the GENIUS Act, establishing a clear regulatory framework for the issuance of stablecoins in the US, requiring issuers to hold 100% highly liquid reserves (such as cash or US Treasury bonds). This legislative breakthrough brought unprecedented regulatory certainty to the cryptocurrency market, driving accelerated inflows of institutional funds.

ETF Market Divergence: The US Bitcoin ETF market showed significant divergence in 2025. BlackRock's iShares Bitcoin Trust (IBIT) attracted a cumulative inflow of $24.8 billion, far exceeding all other ETF products; while Grayscale Bitcoin Trust (GBTC) continued to experience significant outflows of $3.7 billion. Overall, excluding IBIT, US Bitcoin ETFs recorded a net outflow of $3.5 billion in 2025, indicating a clear divergence in market preferences across different products.

Long-term holder selling pressure: Continued selling by long-term Bitcoin holders became the main source of pressure in the market in 2025. In 2025 alone, nearly $300 billion worth of Bitcoin, dormant for over a year, re-entered the market.

Declining network activity: Bitcoin network activity fell to its lowest level in 12 months by the end of 2025.

2026 Phased Price Trend Forecast:

First Quarter (January-March): Consolidation and Bottoming Phase

Bitcoin is expected to be in a consolidation and bottoming phase during the first quarter of 2026. The main characteristic will be wide price fluctuations within the $85,000-$90,000 range, with cautious market sentiment and low trading volume.

The mining of the 20 millionth Bitcoin around March 12, 2026, will be the most important event in Q1. This milestone will reinforce Bitcoin's scarcity narrative and may trigger short-term speculative buying.

Considering all factors, the expected average price of Bitcoin in Q1 is approximately $87,000. The mining of the 20 millionth Bitcoin in March may push the price up to $92,000-$95,000 in the short term, but it may subsequently fall back to the $85,000-$88,000 range for consolidation.

Q2 (April-June): Breakout Attempt Phase

Bitcoin will enter a breakout attempt phase in Q2, with market focus shifting to expectations of a Fed rate cut and institutional inflows. Prices are expected to attempt to break through previous highs after bottoming out in Q1.

Technical Breakout Signals: From a technical analysis perspective, Bitcoin needs to break through the $90,000-$95,000 resistance zone in Q2 to confirm a new upward trend. Market sentiment is expected to gradually recover from its current cautious state in Q2, reflecting reduced market uncertainty. It is anticipated that skewness will return to a neutral level as prices rise in Q2.

The expected average price for Bitcoin in Q2 is approximately $95,000. The key breakout point is at $95,000, with a target of $100,000-$110,000 after a breakout. If the Fed's rate cut exceeds expectations or institutional funds flow in significantly, a price surge to $115,000 cannot be ruled out.

Q3 (July-September): Trend Confirmation Phase

Bitcoin will enter a trend confirmation phase in Q3. If Q2 successfully breaks through key resistance, Q3 will confirm the arrival of a new bull market; conversely, if Q2 fails to break through, Q3 may continue to fluctuate within a range.

If Q2 successfully breaks through, the average price of Bitcoin in Q3 will be approximately $115,000. Key resistance levels are at $110,000 (October 2025 high) and $120,000 (psychological level). After breaking through $120,000, the next target is $130,000-$140,000. If Q2 fails to break through, Q3 may continue to fluctuate in the $85,000-$100,000 range, with a quarterly average price of approximately $90,000. In this case, the market needs more time to digest selling pressure and accumulate strength for the next upward move.

Fourth Quarter (October-December): Target Achievement Phase

The fourth quarter is the phase for achieving the 2026 Bitcoin price target. The market will determine the final annual target based on the trends of the first three quarters. Detailed implementation rules will gradually become clearer in Q4. Increased regulatory certainty will remove the last hurdle for institutional allocation, driving more conservative funds into the market.

Based on technical analysis, the target price range for Bitcoin at the end of 2026 is $120,000-$200,000. The specific target depends on the trend throughout the year: (1) If there is a steady rise in the first three quarters, the year-end target is $150,000-$170,000; (2) If there is an explosive rise, the year-end target may reach $200,000; (3) If the rise is limited, the year-end target is $120,000-$140,000. Concentrated Outbreak of Risk Events: Risk events requiring special attention include: (1) the impact of the US midterm elections, which may bring policy uncertainty; (2) profit-taking pressure at the end of the year, especially if prices have already risen significantly; (3) the risk of black swan events, such as major technical failures or regulatory surprises; and (4) liquidity risk, as the market typically faces liquidity shortages at the end of the year.

Conclusion and Price Outlook:

From a long-term perspective, Bitcoin is at a critical stage of transitioning from "digital gold" to "digital economic infrastructure."

As more countries formulate clear regulatory policies, the global acceptance of Bitcoin will significantly increase. It is expected that by 2030, major economies will have clear regulatory frameworks for Bitcoin, and cross-border flows will be more convenient. Bitcoin will be deeply integrated with the traditional financial system, becoming part of the global financial infrastructure. Innovations in Bitcoin-based financial products, such as Bitcoin bonds and Bitcoin insurance, may emerge.

Based on a comprehensive analysis of the macro environment, technical aspects, fundamentals, and market structure, the Bitcoin price target for 2026 is as follows: a year-end price of $150,000, representing an annual increase of approximately 72%. Q1 average price: $87,000; Q2 average price: $95,000; Q3 average price: $115,000; Q4 average price: $140,000; and year-end closing price: $150,000.

The Fed's December meeting minutes reveal deep divisions within the Fed; what is the short-term outlook for the US dollar?

The Fed's December meeting minutes show that while most Fed officials believed further rate cuts were appropriate as inflation gradually declined, significant disagreements remained regarding the timing and magnitude of such cuts. For the US dollar, this deep division means it is highly likely to fall into a volatile pattern with a "ceiling and a floor."

These minutes, released on December 30th, from the December 9th-10th Federal Open Market Committee meeting, highlight the dilemma faced by policymakers in recent decision-making, which has, to some extent, reinforced market expectations that the Fed will maintain interest rates unchanged at its January 2026 meeting.

The minutes noted, "A minority of participants who supported the rate cut at this meeting indicated that the decision was carefully weighed, or that they could have supported maintaining the target rate range unchanged." Following the release of the minutes, the probability of a rate cut in January 2026, based on federal funds futures contracts, slightly decreased to about 15%.

While the median forecast released after the meeting indicated a 25-basis-point rate cut in 2026, individual officials' forecasts were very broad. Investors, however, expected at least two rate cuts in 2026.

Profound Disagreements:

The meeting minutes continued to reveal significant disagreements among policymakers, focusing on whether inflation or unemployment poses a greater threat to the US economy. The minutes stated, "Most participants believed that a shift towards a more neutral policy stance would help prevent a potential serious deterioration in labor market conditions."

Meanwhile, the minutes further emphasized, "Some participants pointed to the entrenched risk of persistently high inflation and indicated that further rate cuts against the backdrop of current high inflation readings could be misinterpreted by the market as a reduction in policymakers' commitment to achieving the 2% inflation target."

Powell stated this at the post-meeting press conference. For the dollar, this means it will neither plummet due to market dovish euphoria (due to hawkish forces acting as a counterbalance) nor experience a strong reversal due to a robust economy (because the rate-cutting cycle has begun and there are concerns about employment).

The dollar may be entering a period of uncertainty with a "ceiling and a floor," with trading logic likely to frequently switch between "recession fears" and "inflation fears" until one side's data provides a decisive victory.

Gold, the King of Safe Haven: Poised for Best Half-Century Performance

Throughout the year, gold prices have risen by 66%, poised for their best performance since 1979. This phenomenon stems not only from the Federal Reserve's monetary policy adjustments but also from the combined effects of central bank gold purchases, capital inflows, and international events.

Towards the end of 2025, the gold market experienced a dramatic rollercoaster ride. It plummeted from its all-time high of $4,549.80 per ounce, hitting a low of around $4,303, marking its largest single-day percentage drop since October 21st. This decline was primarily driven by profit-taking pressure, with investors locking in profits after a period of continuous gains, leading to a short-term market correction.

However, this decline quickly attracted bargain hunters, propelling gold to a strong rebound on Tuesday. This demonstrates the market's continued recognition of gold's safe-haven status. The influx of safe-haven buying further strengthened this rebound momentum as investors refocused on global geopolitical and economic risks, viewing gold as a safe haven.

This phenomenon is not isolated, but rather stems from the dual pressures of a stronger dollar and rising US Treasury yields. The dollar index maintained its upward trend after the release of the Federal Reserve meeting minutes, while the 10-year Treasury yield rose slightly to 4.127%, factors that collectively diminished gold's appeal as a non-interest-bearing asset.

Nevertheless, the overall trading environment remains favorable for gold, reflecting unwavering investor confidence in its long-term value. Looking back at the year-end, this volatility is actually a normal adjustment within a gold bull market; it not only tests the market's resilience but also builds momentum for potential further gains.

The Federal Reserve's monetary policy has always been a core variable influencing gold prices, and the December 2025 meeting minutes revealed profound disagreements among policymakers. At its December 9-10 policy meeting, the Fed decided to cut interest rates by 25 basis points, lowering the target range for the benchmark interest rate to 3.5%-3.75%, marking the third consecutive rate cut.

This policy stance had a dual impact on the gold market. On the one hand, successive interest rate cuts lowered the opportunity cost of holding gold, driving a 66% increase for the year. On the other hand, internal divisions and a cautious attitude towards further easing cooled market expectations for interest rate cuts in 2026 to only about 50 basis points. This limited the short-term upside potential for gold to some extent, but also provided long-term support, as the Federal Reserve might be forced to accelerate easing if economic data deteriorates, thus benefiting gold. The meeting minutes also highlighted the decision to initiate the purchase of short-term US Treasury bonds, which was characterized as a technical operation aimed at maintaining the stability of bank reserve levels and the federal funds rate, rather than a policy shift. This further stabilized market expectations and prevented excessive volatility in gold due to policy uncertainty.

Besides monetary policy, geopolitical risks have been a significant catalyst for the 2025 gold bull market. At the end of the year, Russia accused Ukraine of attempting to attack President Putin's residence and vowed retaliation, while Ukraine called the accusation baseless.

Meanwhile, Polish Prime Minister Tusk optimistically stated that, thanks to US security guarantees, Ukraine could achieve peace within weeks, although success was far from certain. Market skepticism regarding a Russia-Ukraine peace agreement and rising broader geopolitical risk indicators provided solid support for gold prices.

Looking back at the year, the Russia-Ukraine conflict, which began with a full-scale offensive in 2022, continued to escalate, coupled with other hotspots such as Middle East tensions, driving safe-haven flows into the gold market.

Furthermore, strong central bank purchases and inflows into gold-backed ETFs amplified this effect, creating a "perfect storm." These factors not only supported gold's rebound but also allowed it to remain resilient during year-end volatility. If geopolitical risks continue to escalate in 2026, gold's safe-haven appeal will be even stronger.

The movements of the US dollar and US Treasury yields directly impacted gold's pricing mechanism. Despite the dollar's nearly 10% decline throughout the year, marking its worst annual performance since 2017, the year-end rebound still put pressure on gold.

Meanwhile, US Treasury yields fluctuated slightly, with the 10-year Treasury yield rising 1.2 basis points to 4.127% and the 30-year yield rising 0.4 basis points to 4.808%. These gains have diminished gold's appeal, as higher yields have boosted returns on bond holdings.

In summary, gold's 66% gain in 2025 not only marked its best annual performance since 1979, but was also the result of a confluence of factors including interest rate cuts, geopolitical tensions, central bank purchases, and ETF inflows. Although the year-end rebound was hampered by a rising dollar and yields, bargain hunting and safe-haven demand helped stabilize the market.

Looking ahead to 2026, with increasing divergence in Federal Reserve policy, a flurry of economic data releases, and evolving geopolitical risks, gold is still expected to continue its bullish trend. Investors should closely monitor the January employment and inflation reports, as well as developments in the Russia-Ukraine situation, which will determine whether gold can reach new highs. In this uncertain era, gold is not just an asset, but also an anchor of confidence.

Oil Prices Slide Towards Biggest Drop Since 2020; Plunging Nearly 20%!

US crude oil prices may be heading towards their worst annual drop since the 2020 pandemic. Oil prices remain under pressure as market concerns that a severe oversupply will dominate sentiment and persist into 2026 trading continue.

Crude oil prices plummeted in 2025 due to a surge in supply from OPEC+ and its competitors, coupled with slowing global demand growth. Top forecasting agencies, including the International Energy Agency, predict a significant oversupply in 2026, with even the OPEC Secretariat, typically more optimistic than other agencies, forecasting a moderate surplus.

Furthermore, traders are watching the partial US blockade of Venezuelan oil shipments. US President Trump's revelation of a secret US strike on what he described as a drug trafficking facility raises new questions about how far Washington is willing to go in pressuring the Maduro regime.

Crude Oil Technical Outlook

Under the aforementioned risks, the market is forecasting a bearish outlook for crude oil prices in 2026. Oversupply pressures combined with a two-year downtrend continuing from the September 2023 high threaten exporters' break-even prices. Demand potential and key price levels will be crucial indicators for confirming the 2026 outlook.

From a technical perspective, crude oil prices have been dominated by a descending channel since their 2022 peak. A clearer descending channel structure formed from the September 2023 high, coupled with increasing global supply, continues to suppress prices below the $60 mark.

On the upside, a weekly close above $62.60 could open a path to $66.40 and then $68. If the trend remains above the upper channel line and the psychological level of $70, it would signify initial confirmation of a long-term bullish reversal structure. On the downside, a decisive break below $55 would touch the lower boundary of the long-term channel at $50, significantly reinforcing the bearish bias.

The overall structure of crude oil is showing a potential double-bottom reversal pattern, which corresponds to the risk of exporter breakeven prices, whether based on the low of $55 or the lower boundary of the two-year channel at $50. However, as long as prices remain within the descending channel formed since 2023, coupled with slowing global oil demand growth, the overall bearish trend remains unchanged.

Overview of Important Overseas Economic Events and Matters This Week:

Monday (January 5th): Australia's ANZ Consumer Confidence Index for the week ending December 21st; Eurozone's January Sentix Investor Confidence Index; US December ISM Manufacturing PMI

Tuesday (January 6th): Australia's ANZ Consumer Confidence Index for the week ending January 4th; UK December SPGI Services PMI Final Reading; Speech by Richmond Fed President Barkin, 2027 FOMC Voting Member

Wednesday (January 7th): Australia's November Bureau of Statistics CPI YoY - Seasonally Adjusted (%); Eurozone's December Harmonized CPI YoY - Unadjusted Preliminary Reading (%); US December ADP Employment Change (thousands); US October Durable Goods Orders MoM (Revised) (%); US October Factory Orders MoM (%); US December ISM Non-Manufacturing PMI; US November JOLTs Job Openings (thousands)

Thursday (January 8): Australia November Import/Export MoM (%); Eurozone December Economic Sentiment Index; Eurozone November Unemployment Rate (%); US Initial Jobless Claims for the Week Ending January 3 (thousands)

Friday (January 9): Eurozone November Retail Sales MoM/YoY (%); US December Non-Farm Payrolls (Seasonally Adjusted) (thousands); US December Average Hourly Earnings YoY (%); US December Unemployment Rate (%); US January University of Michigan Consumer Sentiment Index (Preliminary)

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