Author: Fiona Craig

Goldman Sachs strategists said the U.S. dollar could be quietly building momentum for further gains, warning that a broader energy shock may hurt European growth prospects and support additional upside for the currency.

While the trade-weighted dollar has traded in a relatively narrow range in recent months, Goldman argued that the surface stability hides much larger moves across global currency markets. The bank identified two dominant forces — persistent energy disruption and growing AI-related demand — as key drivers reshaping terms of trade and creating wider differences in currency performance.

According to the strategists, those factors pull growth in different directions but both contribute to rising inflation, which fits with Goldman’s current macroeconomic outlook. “Our global growth expectations have been roughly stable since the middle of March, despite a longer conflict, while inflation projections have continued to drift higher,” the strategists wrote.

“The clearest risk for a stronger Dollar is if a wider energy shock begins to pressure growth, policy, and prospective returns in other developed countries, particularly Europe,” they said.

Goldman said the dollar’s recent sideways movement reflects a balance between stronger commodity-linked cyclical currencies and heavily managed Asian foreign exchange markets.

The strategists noted that official intervention in currencies including the yen and Indian rupee has capped dollar gains despite otherwise favourable fundamentals, though they warned that such intervention may not remain effective without a material shift in global macro conditions.

The bank also pointed to last week’s dollar rally following stronger U.S. inflation readings, which lifted global bond yields and illustrated how quickly the greenback can respond when macro risks intensify. Limited progress from the Trump-Xi summit and ongoing constraints in energy supply further highlighted the dollar’s relative defensive appeal, Goldman said.

If market risk appetite remains stable, Goldman expects the recent divergence in currency performance to continue, with commodity-exporting currencies outperforming while rate-sensitive importers remain under pressure.

To capture that theme while guarding against a disruptive market shock, the bank favours holding a basket of the Brazilian real, Hungarian forint, Mexican peso and South African rand against short positions in the euro, Swedish krona and Thai baht.

Goldman added that rising inflation alongside resilient growth has already driven bond yields higher, and warned that any extension of the energy shock “should continue to drive relative returns consistent with shifting terms of trade,” a trend the strategists believe would support broader gains for the U.S. dollar against major developed-market currencies.

JPMorgan lowered its 2026 gold price forecasts as short-term demand momentum weakened, although the bank maintained its broader bullish stance and continues to expect gold prices to approach $6,000 per troy ounce by year-end.

The Wall Street bank reduced its average 2026 gold price forecast to $5,243 per ounce from $5,708 previously, citing softer investor interest and lighter positioning across the market.

Gold is currently trading between its 200-day moving average near $4,340 per ounce and the 50-day moving average around $4,730 per ounce, while futures positioning and ETF inflows remain subdued.

“Gold is on the back burner for most investors at the moment,” analysts led by Gregory Shearer wrote, noting that concerns over possible Federal Reserve rate hikes in response to energy-related inflation pressures are weighing on short-term sentiment.

Even so, JPMorgan said the recent pullback should be viewed as a temporary pause rather than a lasting shift in trend. The bank said its bullish long-term thesis — driven by fiscal concerns, currency debasement risks, geopolitical fragmentation and uncertainty around U.S. policy — remains intact, but is “on hold until more clarity arrives around a resolution of the Iran conflict.”

A major catalyst the bank is monitoring is the potential reopening of the Strait of Hormuz, which JPMorgan’s energy analysts expect could happen in June. Analysts believe that outcome would ease inflation fears and help reverse recent gains in the U.S. dollar and real yields, allowing gold to recover toward resistance levels between $4,900 and $5,100 per ounce.

The bank also expects investors who previously reduced gold exposure to gradually return during the second half of the year, supporting renewed demand momentum.

JPMorgan lowered its estimate for central bank gold purchases in 2026 to 640 tonnes from 800 tonnes after officially reported net purchases slowed to 16 tonnes in the first quarter amid increased selling activity. Including unreported buying, however, total central bank demand still reached 244 tonnes during the quarter, according to estimates from the World Gold Council and Metals Focus.

The bank also cut its forecast for ETF inflows this year to roughly 400 tonnes from 580 tonnes previously, though it noted that global gold ETF holdings remain 108 tonnes higher year-to-date.

Analysts warned that the biggest threat to the outlook would be a scenario in which strong U.S. employment data and accelerating inflation force the Federal Reserve into an extended tightening cycle, potentially leading to sustained outflows from Western gold ETFs.

Hedge funds have been reducing exposure to U.S. semiconductor shares after the sector’s strong rally, taking profits while continuing to maintain significant positions tied to the artificial intelligence theme, according to analysis from Goldman Sachs cited by Bloomberg on Thursday.

Figures from Goldman Sachs’ prime brokerage division reportedly showed that semiconductor and semiconductor equipment companies represented the most heavily net-sold U.S. subsector over the past month. The selling activity mainly reflected investors scaling back bullish positions rather than aggressively increasing bearish bets against the industry.

As a result, the sector has shifted into net-selling territory for the year so far.

The move comes after a dramatic surge in chip-related stocks. Goldman’s basket tracking AI semiconductor companies has outperformed the S&P 500 by more than 50% this year, while the broader benchmark itself had risen more than 18% between late March and a recent three-session decline.

South Korea’s Kospi index, often viewed as an indicator of global demand for AI infrastructure, briefly climbed above the 8,000-point level for the first time in mid-May. The index had advanced more than 80% year-to-date before retreating sharply.

Goldman’s prime brokerage desk reportedly described the recent positioning changes as portfolio rebalancing rather than a sign of weakening confidence in artificial intelligence investments. The bank noted that overall exposure to U.S. AI-related stocks within its technology, media and telecommunications basket remains close to record highs.

At the same time, hedge funds have increased short positions in broader stock index and exchange-traded fund products as protection against wider market risks. According to the report, these hedging positions are now at their highest level in roughly a decade.

Goldman analysts also noted that gross leverage across hedge fund portfolios climbed to a fresh five-year high this month, while net leverage remained comparatively stable — a pattern the bank said differs from the type of speculative exuberance currently being seen among retail investors.

The Trump administration’s reported decision to award $2 billion in grants to leading quantum-computing companies marks one of the strongest signals yet that quantum technology has moved from experimental science into the realm of national strategic infrastructure.

According to a Reuters report citing the Wall Street Journal, the U.S. Department of Commerce is expected to distribute funding across nine companies, with major allocations going to IBM and GlobalFoundries, while firms including D-Wave Quantum, Rigetti Computing, and Infleqtion are also expected to receive substantial support.

What makes the initiative especially notable is the structure of the investment. The U.S. government is reportedly taking equity stakes in participating firms, expanding a strategy already used in semiconductor manufacturing and critical minerals. The move reflects growing concern in Washington over technological competition with China and the need to secure domestic leadership in emerging computing systems.

Quantum computing has long been viewed as a transformative technology capable of solving highly complex mathematical and optimization problems that classical computers struggle to process efficiently. Potential applications range from pharmaceutical discovery and financial modeling to logistics, cybersecurity, and advanced defense systems.

Yet the industry remains in an early and technically difficult phase. Current quantum systems still devote enormous computational resources to error correction, limiting practical large-scale deployment. That challenge has kept the sector largely speculative despite years of investor enthusiasm.

The latest federal backing could change that dynamic.

Government participation provides not only funding, but also validation. Markets responded immediately, with shares of several quantum-related companies reportedly rising between 7% and 21% in premarket trading following the news.

While much of the attention remains focused on hardware developers and chipmakers, the broader quantum ecosystem is beginning to attract increasing interest. Analysts are now watching companies involved in quantum software, infrastructure, cybersecurity integration, and specialized enabling technologies that could support commercial adoption over the next decade.

The larger companies are using different fundamental approaches to Quantum computation. Among the emerging names being discussed within the sector is Delta Gold Technologies (AQSE:DGQ) (USOTC:DGQTF), which is working with Penn State in the USA and University of Toronto, Canada on a new way to make the fundamental building block called a qubit. 

As government-backed investment accelerates across the quantum space, smaller and mid-stage technology firms connected to supporting architectures, data security, and next-generation processing environments may increasingly benefit from sector-wide momentum.

The administration’s investment strategy also underscores a broader shift in industrial policy. Rather than relying solely on private capital markets, Washington appears increasingly willing to act as a direct strategic investor in technologies considered vital to economic competitiveness and national security.

That approach could reshape the development timeline for quantum computing in the United States.

For decades, quantum research was largely confined to universities and specialized laboratories. Today, it is becoming a geopolitical priority, an industrial policy objective, and potentially one of the defining technology races of the next generation.

If the current funding wave succeeds in accelerating breakthroughs in stability, scalability, and error correction, the sector could move significantly closer to commercial viability. And as the ecosystem matures, companies operating adjacent to the core hardware layer, including firms like Delta Gold Technologies, may find themselves increasingly relevant participants in a rapidly expanding strategic industry.

Mitchells & Butlers (LSE:MAB) shares fell more than 5% on Thursday after the pub and restaurant group reported a sharp slowdown in recent like-for-like sales growth, despite first-half earnings broadly matching market expectations.

The company, which owns brands including Harvester, Miller & Carter and Toby Carvery, generated adjusted operating profit of £181 million for the 28 weeks ended April 11, unchanged from the same period last year.

The result was broadly in line with analyst expectations, compared with forecasts of £182 million from both Morgan Stanley and Visible Alpha consensus estimates.

Revenue increased to £1.49 billion from £1.45 billion a year earlier, although this came in slightly below analyst forecasts of between £1.50 billion and £1.51 billion.

Like-for-like sales rose 3.3% during the first half, supported by strong trading in the first quarter when growth reached 4.5%. However, momentum slowed during the second quarter, where comparable sales growth eased to 1.8%.

For the 30 weeks to April 25, like-for-like sales growth stood at 3%.

The company said growth slowed further to just 1.1% in the most recent three-week period, attributing the weaker performance to “a strong prior year comparative, which benefited from favourable weather alongside some indications of macroeconomic pressures and, more recently, disruption from tube strikes.”

Adjusted earnings per share came in at 17.4 pence, slightly ahead of Morgan Stanley’s forecast of 17.1 pence but below the Visible Alpha consensus estimate of 17.8 pence.

Adjusted pre-tax profit totaled £139 million, compared with analyst estimates ranging from £138 million to £143 million.

Adjusted EBITDA reached £256 million, exceeding both Morgan Stanley’s £254 million estimate and the Visible Alpha consensus forecast of £251 million.

The group’s adjusted operating margin narrowed by 0.3 percentage points to 12.1%.

“The company puts weakness down to unhelpful weather, tube strikes and some broader macro uncertainty, but sounds upbeat on the outlook. We currently model FY26e LfL sales +3.5% which implies an improvement to +3.7% in H2, which looks a tad ambitious,” Morgan Stanley said.

Mitchells & Butlers said full-year cost headwinds are now expected to total around £120 million before mitigation measures, equivalent to roughly 5.5% of the company’s cost base and around £10 million lower than previous guidance.

Management added that approximately 60% of those cost pressures are expected to fall within the first half of the financial year.

Looking ahead to fiscal 2027, the company expects annual cost headwinds before mitigation to moderate to around £95 million, representing approximately 4% of the cost base.

Net debt excluding leases fell to £747 million from £860 million a year earlier.

Cash inflow before bond amortisation totaled £98 million compared with £131 million in the prior-year period, while capital expenditure increased to £117 million from £92 million.

Mitchells & Butlers currently operates 1,712 locations across the UK and Germany, including 1,638 directly managed sites.

Oil markets recovered on Thursday, with prices climbing more than 1% after steep losses in the previous session, as investors continued to monitor uncertainty surrounding peace negotiations between the United States and Iran while falling inventories and supply concerns provided additional support.

By 06:18 GMT, Brent crude futures were up US$1.27, or 1.21%, at US$106.29 per barrel, while U.S. West Texas Intermediate crude futures gained US$1.29, or 1.31%, to US$99.55 per barrel.

Both benchmarks had plunged more than 5.6% on Wednesday to their lowest levels in over a week after President Donald Trump said negotiations with Iran were in the “final stages,” although he also warned that additional attacks could follow if Tehran refused to accept a peace agreement.

“The oil market remains overly sensitive to Iran-related headlines, with participants continuing to pin considerable hope on reports that talks between the U.S. and Iran are progressing,” ING analysts said in a note Thursday.

“We’ve been in this situation multiple times before, which ultimately led to disappointment,” they added, while forecasting an average Brent crude price of US$104 per barrel during the current quarter.

Iran responded by warning against further military action and announced new measures aimed at strengthening its control over the Strait of Hormuz, the strategic maritime passage that before the conflict handled oil and liquefied natural gas shipments equivalent to around 20% of global demand.

On Wednesday, Tehran announced the creation of a new “Persian Gulf Strait Authority,” stating that a “controlled maritime zone” would be enforced within the Strait of Hormuz.

Iran effectively shut the strait following U.S. and Israeli strikes that triggered the conflict on February 28. Although most military activity has eased since a ceasefire was reached in April, Iran continues restricting maritime traffic through Hormuz while the United States maintains a blockade along Iran’s coastline.

The disruption to supplies from the critical Middle Eastern energy-producing region has forced governments to draw heavily on both strategic and commercial reserves, increasing concerns over rapidly shrinking inventories.

According to the U.S. Energy Information Administration, the United States withdrew nearly 10 million barrels from its Strategic Petroleum Reserve last week, marking the largest weekly drawdown on record.

Additional support for crude prices came from EIA data showing a sharper-than-expected decline in U.S. oil inventories, reinforcing concerns about ongoing supply disruptions.

“The drawdown in oil inventories will make it difficult for oil prices to remain low,” said Mingyu Gao, chief researcher for energy and chemicals at China Futures.

“With the Strait of Hormuz blocked, global refined-product and onshore crude inventories are expected to fall below their lowest levels for this time of year in the past five years by late May and late June.”

Gold prices traded modestly lower on Thursday as markets weighed optimism over a possible diplomatic breakthrough between the United States and Iran against the pressure of elevated bond yields and a resilient U.S. dollar.

By 05:33 ET (09:33 GMT), spot gold was down 0.2% at US$4,536.09 an ounce, while gold futures declined 0.5% to US$4,536.01 an ounce.

Investor sentiment has increasingly focused on hopes that negotiations could bring an end to the conflict between Washington and Tehran, which has continued for more than two months. President Donald Trump said the United States was in the “final stages” of discussions surrounding a draft peace agreement, although he cautioned that tensions could escalate again, warning that “we’re going to do some things that are a little bit nasty” if talks fail.

Iran has meanwhile stated that it is reviewing the latest proposals submitted by Washington aimed at ending the war.

Markets remain especially attentive to any developments that could reopen the Strait of Hormuz, the crucial shipping corridor off Iran’s southern coastline that has been largely shut to tanker traffic since the outbreak of the conflict in late February. Shipping data referenced in media reports earlier this week indicated that some vessels have recently resumed passage through the route.

Brent crude futures, the global benchmark for oil prices, were last trading lower at US$103.97 a barrel after retreating from levels around US$110 following Trump’s remarks about a potential agreement. Despite the decline, oil remains substantially above pre-conflict levels near US$70 a barrel.

Concerns continue to circulate that a prolonged Middle East conflict could reignite global inflation through higher energy prices, potentially prompting central banks to keep interest rates elevated or tighten policy further.

Gold, which does not generate yield, often struggles to compete in high-rate environments.

At the same time, demand for the U.S. dollar as a safe-haven asset during the geopolitical crisis has reduced some of gold’s appeal. Some investors believe the United States could be comparatively insulated from rising oil prices because of its role as a major energy exporter. A stronger dollar also makes gold more expensive for holders of foreign currencies.

Other precious metals also weakened, giving back part of their recent gains. Spot platinum fell 0.3% to US$1,949.70 per ounce, while spot silver dropped 0.6% to US$75.4065 per ounce.

“Base metals are starting the morning on a cautious footing as markets continue to balance shifting geopolitical signals with a softer macro backdrop,” analysts at Britannia Global Markets said in a note.