We remain constructive over the medium-term outlook for gold, underpinned by expectations that the Fed will continue easing its policy into 2026, rates should trend lower overall, and central bank and institutional diversification demand should stay strong.

Selena Ling
Head, Global Markets Research & Strategy,
OCBC

Oil

Looking ahead, we believe the volatility in oil price movements has stabilised, driven by a delicate balance between increasing OPEC+ production (OPEC+ announced another production hike for December) and concerns over supply disruption from US sanctions against key Russian oil companies. For 2026, we expect oil prices to ease further, with WTI and Brent averaging US$59/barrel and US$62/barrel, due to a favourable supply outlook.

Precious Metals

Gold

After a remarkable rally, gold prices experienced a correction. The pullback largely reflected the unwinding of momentum-driven positions and a reset of macro-optimism as short-term supports faded. Renewed trade diplomacy between the US and major partners such as China, Brazil, and Japan reduced geopolitical risk premium and safe-haven demand. Meanwhile, US Treasury yields climbed ahead of the October Federal Reserve (Fed) policy meeting and Fed Chairman Jerome Powell said that a December rate cut was “not a foregone conclusion”. The Fed’s stance supported both Treasury yields and the US Dollar. Higher nominal yields and a firmer US Dollar dampens the appeal of non-yielding assets like gold.

Although the correction in gold prices was sharp, it is not a complete surprise as it comes after a surge in prices and it helps to restore healthier positioning and valuations. We remain constructive over the medium-term outlook for gold, underpinned by expectations that the Fed will continue easing its policy into 2026, rates should trend lower overall, and central bank and institutional diversification demand should stay strong. Gold’s role as a portfolio hedge against fiscal and policy uncertainty remains intact, even if short-term exuberance gives way to some consolidation.

Silver

Silver rallied sharply before a correction set in. The surge reflected severe market tightness, strong macro tailwinds, and spillover strength from gold. Lease rates had spiked, spot–futures spreads flipped into backwardation, and London inventories fell — all of which pointed to a squeeze in physical supply. ETF inflows and rising speculative longs further amplified the rally.

A correction set in, as the squeeze eased and sentiment normalised. Lease rates fell while cross-border shipments from China and the US replenished London inventories, bringing down borrowing costs.

The correction was healthy, and the medium-term picture remains constructive. Silver benefits from its dual role as a precious and industrial metal. Its safe-haven appeal mirrors gold’s drivers, while strong industrial demand from the solar, EV, and electronics sectors underpins real consumption. With global growth still resilient and Fed easing expectations intact, silver remains in a sweet spot within the commodities complex, supported by tight supply, firm industrial demand, and steady macro tailwinds.

Currency

Looking into 2026, we expect the US dollar (USD) to trade moderately softer. Fading US exceptionalism and the Fed’s easing cycle is expected to gradually erode the greenback’s carry advantage. Recent private sector data reinforce the view of a softening US labour market with job creation slowing, layoffs on the rise, and key indicators such as job postings and wage growth trackers declining.

Our base case projects one additional Fed rate cut in December 2025, followed by a further 25 basis point reduction in the first quarter of 2026. Additional easing will likely hinge on inflation moving closer to the Fed’s 2% target. Under these conditions, the USD has room to depreciate, provided that risk-on sentiment remains intact, global growth outside the US remains supported, and the Fed maintains its easing trajectory.

However, near-term risks warrant some caution. First, a divided Fed, where hawkish rhetoric emerges in response to upside surprises in US economic data, could unsettle markets. Second, a larger-than-expected passthrough of tariffs to US inflation could complicate the Fed’s easing path. Either scenario could strengthen the USD and weigh on high-beta currencies. More broadly, ongoing policy unpredictability in the US, coupled with medium-term concerns over rising debt and fiscal deficits, is likely to sustain a broad, albeit potentially volatile, downward trend in the USD.

The Euro was weighed down by political uncertainties in the Euro-area and the rebound in the USD since mid-September. Nevertheless, political uncertainties in France have temporarily receded after the French parliament voted to suspend pension reform giving PM Lecornu a lifeline. But beyond this, the compromise on budget remains challenging. While near-term political noise may keep the Euro capped, the broader outlook remains constructive. The ECB’s rate-cut cycle appears close to its end, while the Fed still has room to ease further - a dynamic that should narrow yield differentials in favour of the Euro. In addition, Germany’s EUR 400 billion growth and investment plan, rising European defence spending, tentative signs of stabilisation in China’s economy (and a steadier Renminbi; RMB), as well as continued portfolio and reserve diversification flows into alternative reserve currencies, still support a buy-on-dips bias for the Euro over the medium term.

The Japanese yen (JPY) was negatively affected by both a stronger USD, owing to a hawkish Fed rate cut in October and market disappointment with the BOJ’s decision to keep policy rate on hold. Delayed BOJ policy normalisation, the risk of a heavier fiscal burden amid a rise in the debt servicing cost, an increase in social and defence spending and the chance of early snap elections are some factors that may pose downward pressure on the JPY in the interim. However, given the JPY’s weakness, Finance Minister Katayama said the government will be monitoring currency movements, including those driven by speculative flows, with a high sense of urgency. Verbal intervention may slow the JPY’s decline at times but cannot change the broader market momentum. We will watch to assess if verbal interventions increase in intensity or progresses towards actual intervention, which may lead to JPY bears exercising greater caution. Ultimately, for the USDJPY to turn lower would require a softer USD and greater commitment from the BOJ to hike rates.

The Singapore dollar (SGD) has been resilient largely due to a softer USD, the SGD’s appeal as a safe haven and given the Singapore economy’s solid fundamentals. At its October policy review, the Monetary Authority of Singapore (MAS) kept monetary settings unchanged - maintaining the current rate of appreciation of the S$NEER (Singapore Dollar Nominal Effective Exchange Rate) policy band, as well as its width and centre. The MAS noted that core inflation is likely to bottom out soon before rising gradually through 2026 as temporary disinflationary factors fade. For now, the policy stance seems appropriate, with room to ease only if growth and inflation weaken more meaningfully. While MAS policy guidance helps anchor medium-term expectations, the USDSGD will continue to be driven largely by external factors - notably the broader USD trend, Fed policy signals, movements in the RMB, and shifts in global risk sentiment. In the near term, the pair may still have room to edge higher before stabilising.