In December, China saw its M2 money supply rise by 8.5% compared to last year, exceeding predictions of 8%. This stronger-than-expected growth could influence economic choices. Several currencies shifted in value, with EUR/USD dropping below 1.1650 as strong US economic data impacted the Federal Reserve’s interest rate plans. On the other hand, GBP/USD stayed above 1.3400 after a surge due to positive data on UK growth and industry.

Gold Sentiment

Gold reached a peak of $4,643 but settled closer to $4,600. This drop is connected to US data suggesting steady interest rates will remain. Additionally, the cryptocurrency market experienced losses as the US Senate delayed talks on a market-structure bill. Looking to 2026, there are discussions about the end of Jerome Powell’s term as Chair of the Federal Reserve. Speculation continues about the future direction of the US central bank amid differing views among policymakers. FXStreet offers extensive resources for market observers. It emphasizes the need for thorough research and recognizes the risks involved in open market investments. The information provided is for informational purposes and should not be seen as trading advice. The higher-than-expected M2 money supply data from China indicates that the People’s Bank of China is sticking with a supportive policy. This extends the easing trend we saw throughout 2025 and should help assets tied to Chinese growth. Investors might explore options strategies to benefit from possible gains in the Australian dollar and industrial commodities in the coming weeks. On the flip side, the strength of the US dollar is a key theme, driven by strong economic data that supports the Federal Reserve keeping rates steady. Last week’s report showed the US added over 216,000 jobs in December, and core inflation remained stable at about 3.9%, making it tough to bet against the dollar. This situation puts pressure on pairs like EUR/USD, and traders might want to sell during any rallies.

Economic Implications

This environment limits gains in other assets, keeping gold’s momentum subdued even as it stays near historically high prices. The strong US dollar and the likelihood of ongoing higher interest rates make non-yielding assets less appealing. Selling call options on gold futures could be a smart strategy to take advantage of potential price stabilization. Looking ahead, Jerome Powell’s upcoming exit from the Fed adds significant uncertainty for the second half of the year. While current data supports stable policy, a change in leadership might significantly alter market conditions. Buying longer-term volatility on major equity indices or currency pairs could be a wise way to prepare for this uncertainty. Create your live VT Markets account and start trading now.

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