July Market Review: Oil Volatility, AI Correction and August Outlook

Key Takeaways

-US-Iran tensions increased energy market volatility as oil prices rallied on supply disruption concerns.
-The US dollar remained supported by safe-haven demand, inflation risks and cautious Fed expectations.
-Gold stayed under pressure from dollar strength and higher yields, while copper benefited from AI infrastructure and electrification demand.
-Technology stocks corrected as investors reassessed AI valuations and future earnings growth.
-Crypto markets recovered as institutional demand supported Bitcoin and broader digital assets.
-August focus will remain on inflation data, Fed policy, earnings and geopolitical developments.

July was a volatile month for global markets as investors balanced geopolitical risks, inflation concerns and changing expectations for monetary policy.

Oil prices became a key market driver after renewed US-Iran tensions increased supply concerns, while equity markets faced pressure as investors took profits from strong technology gains and reassessed AI valuations.

Although inflation showed signs of improvement, higher energy prices created uncertainty around the outlook for central banks. The Federal Reserve maintained a cautious approach as markets continued evaluating the path for interest rates.

Dollar Supported by Rates and Risk Sentiment

The US dollar remained supported by geopolitical uncertainty, inflation concerns and expectations for a cautious Federal Reserve. Higher oil prices increased concerns that inflation progress could slow, reducing expectations for aggressive rate cuts and supporting Treasury yields.

USD/JPY remained one of the strongest currency themes as the widening interest-rate gap between the US and Japan continued supporting carry trade demand.

Markets will continue watching inflation data, Fed guidance and Treasury yields for further dollar direction in August.

Precious Metals Balance Safe-Haven Demand and Dollar Pressure

Gold remained range-bound as investors balanced geopolitical risks against dollar strength and higher interest-rate expectations. While Middle East tensions supported defensive demand, elevated yields limited upside pressure on the metal.

Silver benefited from both safe-haven demand and industrial demand, while copper gained from optimism around AI infrastructure, electrification and data centre investment.

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Publication date:

31 July 2026 - 09:14 (GMT)

The outlook for metals will depend on inflation trends, Fed policy expectations and energy market developments.

Oil Rallies on Supply Concerns

Oil was one of July’s most volatile markets as Middle East tensions pushed supply risks back into focus. Concerns around major shipping routes increased oil prices, although the rally later slowed as traders reassessed whether disruptions would become prolonged.

Markets will continue monitoring the Strait of Hormuz, OPEC+ decisions, inventories and global demand conditions.

AI Growth Faces Valuation Test

Technology stocks came under pressure in July as investors reassessed AI valuations following a strong rally. The NAS100 entered correction territory as semiconductor weakness, higher yields and concerns over AI investment returns weighed on sentiment.

Despite the pullback, long-term AI demand remained supported by continued investment in cloud computing, semiconductors and data centre infrastructure.

Investors are now focusing on whether AI-related companies can deliver earnings growth that justifies current valuations.

Crypto Recovers as Institutional Demand Returns

Crypto markets improved in July as institutional demand supported Bitcoin, Ethereum and selected digital assets.

Improving regulatory developments and stronger investment flows helped sentiment recover, although volatility remained elevated due to macro uncertainty and changing risk appetite.

Early Signals for August

August markets will focus on several key themes:

-Fed Policy and Economic Data: Inflation, employment and growth data will shape expectations for interest rates, Treasury yields and the US dollar.
-Oil and Geopolitical Risks: Developments in the Middle East and major shipping routes could influence energy prices and inflation expectations.
-AI Earnings Outlook: Technology earnings will provide insight into whether AI investment can translate into sustainable growth.
-Market Sentiment: Equities, commodities and crypto will remain sensitive to changes in risk appetite and macro conditions.

July highlighted a market environment shaped by competing forces: geopolitical risks supporting commodities and safe-haven demand, while AI valuations, monetary policy expectations and economic data drove equity and currency movements.

As August begins, investors will continue monitoring inflation trends, central bank guidance, corporate earnings and geopolitical developments as key drivers of market direction.

For a deeper view of cross-asset performance, macro drivers, and trading insights for August, read the full article in the "learn more" button below.