A pivotal week: When CPI clashes with the Fed, and the world awaits surprises on Wall Street

The Beginning of 2026 Brought Signs of Deviation from the Norm in Global Markets

The first full trading days of the new year brought a surprising reversal of the trends that dominated the end of 2025. Although market consensus favored technology stocks and defensive assets, investors unexpectedly flocked to cyclical securities and commodities. The S&P 500 gained 1.6% over the week, while the small-cap (Russell 2000 index) significantly outperformed the stock market with a 4.6% increase. Capital flows were also reflected in passive funds – the Vanguard S&P 500 ETF (VOO) attracted $10 billion in just a few days.

This shift in market optimism is not accidental. As suggested by the research team at Nomura Securities International, the dynamics of cyclical sectors are driven by tangible fundamentals: employment flexibility, rising transportation costs, and strong demand for automobiles. These indicators typically serve as early signals of economic revival.

Precious Metals: A Battle Between Hope and Fears

Spot gold rose over 4% in the past week, earning more than $177. Silver showed an even more impressive result – nearly 10%, or over $7 increase. This extraordinary momentum in the precious metals market is fueled by a combination of geopolitical instability and changing expectations regarding the Fed’s monetary policy direction.

However, the growth path has not been straightforward. The release of the ISM report for the manufacturing sector revealed a stronger-than-expected economy, temporarily dismissing speculation about rapid rate cuts by the Federal Reserve. The bearish trend proved short-lived – Friday’s non-farm employment data reintroduced uncertainty into the discussion about the pace of monetary easing.

CME FedWatch clearly indicates that the market does not anticipate a Fed move before May 2026, or even later. Despite the disappointing (50,000 jobs) figure, unemployment rates remained stable, which some strategists – like Michael Feroli from JPMorgan – interpret as “sufficient” for market stability.

However, another deviation from the norm appears in the forecasts of major investment firms. Morgan Stanley, Barclays, and Citigroup have pushed back their projected rate cut timelines significantly – to June/September, June/December, and March/July/September, respectively.

Fed’s Busy Schedule: Is Listening Enough for Private Investors?

Tuesday will feature a series of speeches by Fed officials – Bostick, Barkin, Williams (in New York), Musalem, and many others. Wednesday will host statements from Paulson (economic outlook), Guindos (ECB), and Ramsden (Bank of England). Thursday will be the day of the Fed’s public reflection – the Beige Book will be released along with a series of speeches, including an opening event by Williams.

Investors will look for signals of the Fed’s readiness to move before the chairman’s stance change. Strategists from Bank of America Global Research have already clearly indicated their belief that rate cuts will not occur until Jerome Powell leaves his position.

Wednesday CPI: A Decisive Moment for Gold and the Dollar

On Tuesday at 21:30 UTC+8, the market awaits the December CPI report – inflation data for the unadjusted annual rate, monthly figures for both overall and core indices. This event could determine the trend of gold and silver prices in the coming days.

Analyst Eren Sengezer emphasizes that an anomaly in CPI data – especially in the core component – could trigger a significant market reaction. If the core index reaches 0.3% or higher, inflation fears could strengthen the dollar. A result below 0.2% could support international gold.

Other important weekly data include retail sales (Wednesday, 21:30), industrial production for the UK and eurozone (Thursday), and the number of unemployment benefit claims (Thursday, 21:30).

The Dollar: Breakthrough and Risks

The dollar index made a significant breakthrough – it broke through the long-avoided 200-day moving average resistance at 98.85. This opens the way to retesting the November 2025 high at 100.39, and then the upper threshold from May 2025 (101.97).

On the other hand, a decline could pull the dollar index toward the December 2025 low (96.21), and then to key supports from 2022 (95.13 and 94.62).

Greenland, Iran, and the Breaking of the World Order

Geopolitics is gaining importance for gold valuation. Secretary of State Rubio plans meetings with Danish and Greenlandic officials, and Trump is once again outlining a vision of territorial expansion. Adam Button from Forexlive notes that if international legal norms are collapsing at the pace observed in early 2026 – arrests of foreign leaders, discussions of occupation, threats of bombing – the world’s reserve currency is in question.

Button highlights Greenland’s particular importance due to Denmark’s foreign exchange reserves (around $90 billion). If Denmark fears confiscation by the USA, a reallocation of reserves could push the dollar down – and gold up.

Additionally, the anti-government unrest in Iran and threats of US intervention add another layer of uncertainty. Trump has announced the possibility of military actions if the regime uses deadly force. Iran responded with assurances of readiness to defend.

Gold: Testing the Deviation from the Norm During the Annual Rebalancing

Weekly Kitco News poll reveals near unanimity on Wall Street regarding bullish gold prospects in the short term. However, the coming days will be challenging – the annual rebalancing of major commodity indices (S&P Goldman Sachs Commodity Index, Bloomberg Commodity Index).

Saxo Bank indicates that the market has been anticipating this sell-off for months, reducing the risk of disorderly changes. However, the behavior of precious metals during this window will be decisive – stabilization or rebound despite mechanical selling would confirm solid baseline demand. Conversely, weakness could suggest fragile positioning.

Jim Wyckoff from Kitco notes that February gold contracts are heading toward the historic maximum of 4584 dollars. The first resistance is at 4500 dollars, then at 4512.40 dollars. The first support is at 4415 dollars, then at 4400 dollars. CPM Group analysts issued a sell recommendation with a target of 4385 dollars and a stop loss at 4525 dollars for the period January 9-20.

Wall Street: Earnings Season, Tariffs, and the Race to 7000 Points

The earnings season begins – JPMorgan, Citigroup, Bank of America, and Delta Air Lines will be among the first. Although the market does not price in further rate cuts in the near term, stocks have risen in recent days. The sentiment suggests that an accelerating economy could bring broad, widespread gains.

The S&P 500 is approaching the historic 7000-point threshold, and the Dow Jones is nearing 50,000 points. However, the tariff question still hangs – the Supreme Court has not yet issued a ruling on the legality of Trump’s tariffs. This decision could indeed change the trajectory of stocks and bonds for a long time.

Monday – A Short Break

On Monday, January 12, Japan celebrates Coming of Age Day – the Tokyo stock exchange is closed. US Treasury futures begin trading at 15:00 UTC+8.

The week lacks clarity. The market stands at a crossroads – between hope for economic revival and pain from the lack of Fed monetary support. For traders, investors, and analysts, the message is: focus on CPI, listen to every word from the Fed, and especially watch how gold and silver perform during the rebalancing. These signals could determine the next moves.