Australia’s TD-MI Inflation Gauge for December has increased to 3.5% year-on-year, up from 3.2%. In other news, the PBOC has set the USD/CNY exchange rate at 7.0051, compared to the previous rate of 7.0078. In global markets, EUR/USD is moving towards 1.1650 as risk aversion rises. GBP/USD is close to 1.3400, influenced by tariff threats from Donald Trump.

Gold Reaches Record High

China’s economy grew by 1.2% in Q4 2025, exceeding expectations of 1.0%. Gold has hit a record high of around $4,700, driven by the Greenland trade conflict, even as the US Dollar pulls back. This week, market focus will be on US PCE figures, remarks from Davos, and results from the BoJ meeting. In the UK, potential BoE rate cuts are on the horizon, with attention on CPI and retail sales. Dash’s price rises towards $100, even amid overall market corrections. Futures Open Interest in Dash has reached $165 million, indicating strong interest from retail investors. Investors should remember the risks involved in market decisions. It’s essential to conduct thorough research before making any financial commitments. FXStreet and the author are not responsible for any inaccuracies or financial losses from using this information. This material is provided for informational purposes only and should not be considered investment advice.

Geopolitical Uncertainty and Safe Haven Assets

The ongoing Greenland dispute has pushed gold prices to a record $4,700, establishing it as the primary safe-haven asset. We believe that call options on gold could be a good way to take advantage of ongoing geopolitical uncertainty, as this rally has outperformed previous highs from 2024. The current high implied volatility also makes selling out-of-the-money puts an appealing strategy for those anticipating a price floor. The US Dollar is weakening due to renewed fears of a trade war, benefiting both the Euro and the Pound. While EUR/USD is nearing 1.1650, the GBP/USD rally to 1.3400 may be limited by expectations of more rate cuts from the Bank of England. This mixture of short-term momentum and central bank policy creates opportunities for spread trades. China’s better-than-expected growth in late 2025, with a Q4 GDP of 1.2%, supports commodity currencies. Coupled with Australian inflation climbing to 3.5%, this indicates that the Reserve Bank of Australia is less likely to cut rates. We see this as a favorable environment for the Australian dollar against the weakening US dollar. The current market is reacting strongly to news, causing significant volatility across various asset classes. We observe that the CBOE Volatility Index (VIX) has likely surged, similar to patterns seen during the US-China trade issues of the late 2010s. Derivative traders may want to consider strategies that benefit from this high volatility, such as straddles on major indices or selling premium if they expect a calmer period. Create your live VT Markets account and start trading now.

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