The Reserve Bank of Australia’s Commodity Index, measured in special drawing rights (SDR), fell to -3.8% in December, down from -1.7%. This index tracks the price changes of key commodities that are vital to Australia’s economy. In other news, West Texas Intermediate (WTI) crude oil rose above $57.50 due to potential supply worries. At the same time, the USD/JPY currency pair approached 157.00, influenced by the Bank of Japan’s cautious approach to interest rate increases. Silver prices increased to over $74, driven by speculation about Federal Reserve cuts and a demand for safe-haven assets. Meanwhile, GBP/USD is trying to reach three-month highs as traders are still in holiday mode.

Impact of Rising Gold Prices

Gold prices have been rising, nearing $4,400, as expectations grow for a more dovish Federal Reserve stance amidst geopolitical tensions. Cardano is also showing early momentum for the New Year, aiming for a breakout from a falling wedge pattern. Economic forecasts for advanced countries from 2026 to 2027 point to a possible year of strong performance. Factors from 2025 are expected to carry over, giving a positive outlook for the global economy. In the crypto world, 2025 was marked by fluctuations. The rise of AI and favorable regulatory changes in the U.S. are expected to support future growth. As markets reopen for 2026, strong momentum from late 2025 continues. Many are anticipating U.S. Federal Reserve rate cuts, with fed funds futures indicating a better than 75% chance of a first cut by the March meeting. This sentiment, which grew after the Fed’s dovish shift in November 2025, is driving several asset classes.

Expectations for Precious Metal Rally

The expectation of lower interest rates is contributing to the rally in precious metals, pushing gold closer to $4,400 per ounce. Historically, periods of falling real yields, like in 2020, have been very favorable for non-yielding assets like gold and silver. We think call options on both XAU/USD and XAG/USD are appealing, especially as a hedge against ongoing geopolitical tensions. In Australia, the picture looks different, with the RBA Commodity Index declining year-over-year to -3.8%. This indicates falling prices for important exports like iron ore, which dropped below $100 per tonne at the end of 2025. This decline in commodity income is putting pressure on the Australian dollar, making AUD/USD put options a smart choice for the upcoming weeks. Energy markets are showing signs of tight supply, with WTI crude staying above $57.50. This reflects the persistent production cuts by OPEC+ throughout 2025, which have supported prices despite worries about a global slowdown. Traders should closely monitor inventory data, as any unexpected withdrawals could result in a rapid price increase, benefiting those in long positions in oil futures. The interest rate gap between the U.S. and Japan continues to influence USD/JPY, pushing it toward 157.00. The Bank of Japan is cautious about tightening too quickly, which has kept the yen weak for more than two years. As long as the Fed is only expected to make modest cuts while the BoJ remains steady, the path for the USD/JPY seems to be upward. Major currency pairs like EUR/USD and GBP/USD are currently calm, which is usual for the first trading days of the year. Historical volatility data shows that implied volatility in major pairs often hits yearly lows during this holiday period. This creates an opportunity to buy straddles or strangles at a lower cost ahead of important economic data expected later in January. Create your live VT Markets account and start trading now.

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