Rate Cuts Are Dead. Now What?

Last week started with excitement and ended with a wake-up call.

For most of the week, traders were juggling two big storylines. First, the Middle East standoff between the US and Iran, which kept oil jumpy and investors nervous. Second, a string of strong US economic numbers quietly building a case that the US central bank, the Federal Reserve (the "Fed"), might actually raise interest rates rather than cut them.

📰 Then Friday's jobs report hit. And it hit hard.

The May jobs report came in far above what anyone expected. The dollar surged to new weekly highs, gold dropped sharply, and the Nasdaq had its worst single day in months. In one afternoon, the hopeful story markets had been telling themselves: lower oil, AI boom, peace on the horizon, ran headfirst into cold, hard reality.

🧨 Welcome to June. It's going to be a big one.

If you want to understand oil right now, just follow the headlines from Washington and Tehran. Every statement, every rumour, every threat moves the price by 3–5% within hours.

Here's how the week played out. Oil jumped more than 4% after President Trump said on CNBC he didn't care if Iran negotiations were over, responding to reports that Tehran would halt talks and threatening to close not just the Strait of Hormuz, but also the Bab el-Mandeb Strait, another key shipping route. That spooked markets immediately; those two waterways together handle an enormous chunk of the world's oil supply.

Then hope crept back in. Trump shifted to a more optimistic tone, saying the strait could reopen quickly if Iran agrees to a memorandum of understanding to halt hostilities. But little concrete progress emerged, and Israel's continued military operations in Lebanon remained a major obstacle to any deal.

By Friday, oil gave back its gains. Brent slipped back toward $93 as traders focused on the lack of a real breakthrough in talks, and as concerns grew about weaker global demand; particularly after Chinese crude imports fell to their lowest level in ten years.

What to watch next week:

Oil's direction is almost entirely in the hands of politicians, not traders. No deal = prices rise. A confirmed ceasefire = another drop lower toward $85. Lebanon is the hidden wildcard; any escalation there could blow up the Iran talks entirely and send oil spiking.

Gold tends to do well when people are worried and when interest rates are low or falling. But when the economy looks strong and rates might go up, gold becomes less attractive; because you can earn better returns elsewhere (like in bonds or savings). Coming into 2026, markets expected the Fed to be cutting rates. But the renewed jump in inflation, fuelled by rising energy prices from the Iran war, has completely changed that calculation.

Before the jobs report even dropped, gold was already testing a key technical level; the 200-day moving average at $4,428. After the blowout number hit, gold fell further as rate hike expectations jumped and the dollar strengthened.

Gold remains weak. Price has lost the 200-day moving average and is now trading below its key short-term levels. Unless gold quickly reclaims the $4,500 area, the chart looks like it is drawing toward the March lows as the next downside target.

What to watch next week: