Safe-haven investments are the main focus in financial markets due to ongoing tensions with US President Donald Trump. He claimed that Denmark can’t protect Greenland properly and threatened to impose tariffs on French wines if France doesn’t support the Gaza Board of Peace. The US economic calendar is mostly quiet. The ADP Employment Change report shows an average of 8,000 jobs added per week recently, a drop from 11,000. The US Dollar Index is down to around 98.50, with the USD performing best against the Japanese Yen. GBP/USD is trading around 1.3460 after UK unemployment figures stayed the same and employment rose. EUR/USD is near 1.1730, supported by positive sentiment data from Germany and the EU, while USD/CAD has dropped to about 1.3830, and USD/JPY is stable around 157.90.

Gold Surge in Geopolitical Instability

Gold has hit a record high of $4,757 amid global unrest, as market attention turns to Trump’s upcoming speech in Davos. Gold is seen as a safe-haven investment and tends to rise when geopolitical tensions grow or interest rates are low. Upcoming economic indicators include UK inflation data and US PCE and GDP reports, along with the BoJ’s monetary policy decision and Eurozone PMI releases. Last year, political talks about Greenland and potential tariffs caused market turmoil. Now, concerns have shifted to supply chain resilience and ongoing trade negotiations, creating a new type of uncertainty. The US Dollar Index, which fell to around 98.50 during the chaos in January 2025, is currently stronger, staying above 104 as of late January 2026.

Yearly Trend Analysis

A year ago, investors flocked to gold, pushing prices up to an incredible high of $4,757 an ounce due to unpredictable political threats rather than solid economic fundamentals. Central bank demand remains strong, with global reserves reportedly increasing by another 950 tonnes in 2025. Gold has since stabilized and now trades around a more sustainable $2,450 an ounce. Last year’s market saw EUR/USD rise to 1.1730, aided by a weak dollar and strong European sentiment. Today, however, the European Central Bank is more aggressively signaling rate cuts than the US Federal Reserve, putting downward pressure on the pair. This suggests considering put options on EUR/USD to protect against continued dollar strength due to interest rate differences. The USD/JPY was at a high of 157.90 in January 2025, reflecting significant policy differences. The Bank of Japan has started a slow normalization of its policy. While the yen is still weak, the chance of sudden government intervention to support it is much higher now. Traders should be careful, as any unexpected hawkish move from the BoJ could cause a sharp decline, making long JPY call options an attractive, though risky, strategy. During the political chaos of early 2025, implied volatility soared, keeping the CBOE Volatility Index (VIX) consistently above 20. Recently, the VIX has been around a much lower level of 14, indicating some complacency in the market despite underlying risks. This situation makes buying longer-dated VIX call options an affordable way to protect portfolios against a sudden increase in market fear. Create your live VT Markets account and start trading now.

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