The USD/JPY dropped to around 154.20 in the early Asian session, marking its lowest level since November 2025. This decline reflects speculation about possible intervention. The Japanese Yen received some temporary support from discussions about potential actions by Japanese and US authorities. However, worries about Japan’s rising government spending may limit budget gains. On Friday, speculation increased after reports revealed that the Federal Reserve Bank of New York had talked with financial institutions regarding the Yen’s exchange rate. Japan is preparing for an election on February 8, raising concerns that recent policies might affect the country’s debt and, in turn, the Yen’s value.

Value of the Japanese Yen

The value of the Japanese Yen, a major global currency, depends on Japan’s economy, the policies of the Bank of Japan, and differences in bond yields. The Bank of Japan plays a key role in managing the currency, but interventions can be politically sensitive. Historically, differences between Japanese and US bond yields have favored the US Dollar over the Yen. Recently, this gap has narrowed due to Japan’s policy changes and global rate cuts. The Yen tends to attract investors during market instability, viewed as a safe-haven currency, which can raise its value compared to riskier currencies. As the USD/JPY falls below 154.50, implied volatility has surged, reaching levels not seen since late 2025. Currency volatility indexes have risen over 15% in the past week, indicating the market is bracing for significant moves leading up to the February 8 election. This unpredictable environment makes buying option straddles a smart strategy to capitalize on potential price swings, regardless of their direction. The risk of intervention from Japanese authorities is real. They previously spent over ¥9 trillion to support the Yen in a similar situation in late 2025. A sudden move could easily push the USD/JPY down by 3-5 yen in one session, making plain long positions risky. Traders considering intervention should buy put options, as these can profit from a drop while limiting risk to the premium paid.

Fundamental Picture

However, the overall situation suggests that any Yen strength due to intervention will be short-lived. Japan’s government debt, which is over 260% of its GDP, poses a long-term concern for the currency. Increased fiscal spending promises tied to the upcoming election will only heighten these pressures on the Yen. This fundamental weakness is compounded by the significant interest rate gap between the US and Japan, which exceeds 300 basis points. We believe this yield difference will continue to draw capital to the Dollar, limiting the Yen’s strength. A prudent strategy would be to take advantage of any intervention-driven drops towards the 150.00 level by purchasing longer-dated USD/JPY call options, preparing for a potential rebound. Create your live VT Markets account and start trading now.

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The Euro is gaining strength as the EUR/USD approaches 1.1870, while the Dollar is weakening due to geopolitical worries and potential currency intervention by the US and Japan. Currently, the EUR/USD is at 1.1872, rising from a low of 1.1835 with a gain of 0.39%. Trade tensions between the US and Canada are increasing, even as tariff threats on Europe have decreased. The upcoming Federal Reserve meeting is crucial, with many expecting rates to stay the same. Investors are keen to hear insights during Chair Jerome Powell’s press conference.

Current Economic Indicators

The US Dollar Index has fallen by 0.41% to 97.05, while the German Ifo Business Climate Index remains unchanged. This month, the Euro has shown strength against major currencies, especially against the Canadian Dollar, which has dropped 3.44%. Concerns about intervention from Japan and the US are affecting the Dollar. US Durable Goods Orders rose by 5.3% in November, exceeding expectations. Traders expect a 44 basis point reduction from the Federal Reserve, while German business confidence has not changed since January. Technically, the EUR/USD appears to be on an upward trend and may test 1.1918 or 1.2000 if it breaks through 1.1907. However, a fall below 1.1800 could lead to a test of 1.1728. The trend shifted from sideways to upward after surpassing the December 24 high of 1.1807. A year ago, the Euro was climbing toward 1.1870 as the Dollar weakened amid geopolitical tensions and rumors of currency intervention. However, that bullish period was short-lived as market conditions have changed significantly since early 2025. Now, with the EUR/USD around 1.1150, we need to adjust our strategies.

Strategic Market Positioning

The US Dollar Index, which struggled below 97.05 last year, has made a strong recovery and now trades above 101. Expectations for 44 basis points of Federal Reserve easing by the end of January 2025 did not happen. The Fed remained cautious as core US inflation hovered around 2.8% for the latter half of 2025. On the Euro side, the sluggish German economy, suggested by flat Ifo data last year, continues to be a concern. Recent Eurostat figures indicate that Eurozone inflation dropped to 1.9% in December 2025, increasing pressure on the European Central Bank (ECB) to adopt a softer policy. This growing difference in central bank policies is critical to consider. Given this situation, we recommend using options strategies that can profit from a slow decline or stable prices. Selling out-of-the-money EUR/USD call options can generate income while providing some protection against small price increases. Although implied volatility is currently lower than during the trade-war discussions of 2025, it still offers enough premium to make these strategies worthwhile. Additionally, the widening interest rate gap between the US and the Eurozone is now more significant than it was a year ago. Utilizing futures or forward contracts to bet on further Euro weakness against the Dollar could be effective, especially with central bank meetings coming up. This strategy helps guard against the chance of the ECB signaling rate cuts before the Federal Reserve takes action. Create your live VT Markets account and start trading now.

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South Korea’s Bank of Korea (BOK) Manufacturing Business Survey Index (BSI) improved from 70 to 73 in February. This index reflects positive feelings among businesses in the manufacturing sector. FXStreet provides various content about how economic factors affect different currencies. This includes changes in the Japanese Yen due to fiscal issues and a decline in the US Dollar Index near 97.00 because of uncertainty with the Federal Reserve.

Currency Pair Updates

Recent updates show AUD/USD staying above 0.6900, reaching 16-month highs, while USD/CAD is slightly up over 1.3700. The People’s Bank of China set the USD/CNY reference rate at 6.9858, up from 6.9843. NZD/USD has pulled back from recent four-month highs, falling closer to the mid-0.5900s due to profit-taking. Additionally, reports highlight Hyperliquid’s HIP-3 platform achieving a significant milestone and Tether Gold controlling 60% of the tokenized gold market. FXStreet highlights important economic updates and legal information about market risks. It emphasizes the need for independent research when making financial choices, reminding users that investments in the market carry significant risks. The platform does not provide personalized investment advice. The ongoing weakness of the US Dollar is creating clear trends, pushing currency pairs like EUR/USD above 1.1900 and GBP/USD near 1.3700. This is largely due to market expectations for a dovish Federal Reserve, particularly after recent US jobs data showed slower hiring than anticipated. Derivative traders might find value in call options on major currencies against the dollar, expecting this weakness to continue until the next Fed meeting.

Gold Momentum and Market Trends

Gold is gaining significant momentum, nearing $5,050. This reflects a broader risk-off sentiment fueled by geopolitical uncertainty and unclear central bank policies. In 2025, demand for tokenized gold surged as investors sought safe havens. The high implied volatility in gold derivatives creates opportunities, and traders may explore strategies that profit from price stability if upcoming Fed announcements ease market concerns. The increase in South Korea’s manufacturing BSI to 73 brings some regional optimism. This is backed by recent government data indicating a 4.2% year-over-year rise in semiconductor exports for December 2025, marking the first increase in sixteen months. This could signal a bottoming of the sector, prompting traders to consider bullish positions on the Korean Won or related equity indices. Central bank decisions this week will be crucial and likely lead to market volatility. The US Dollar Index is at a key support level around 97.00, and unexpected news from the Fed could cause a sharp market reaction. Traders should prepare for this by considering options strategies like straddles, which can benefit from significant price movements in either direction without needing to predict the outcome. Create your live VT Markets account and start trading now.

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US stocks started the week on a positive note. The S&P 500 rose 0.5 percent, the Dow Jones Industrial Average increased by 0.3 percent, and the Nasdaq Composite gained 0.6 percent. Major tech companies like Apple and Meta helped drive these gains as they prepare to report their earnings. However, there were concerns about political risks. President Trump threatened tariffs on Canada, which ties into a potential trade deal with China. Worries about federal funding and immigration policy in Washington raised fears of a government shutdown.

Gold Hits New High

Gold reached a new high, surpassing $5,100 per ounce. This reflects cautious investor sentiment due to political and fiscal uncertainties. In the commodities market, gold miners such as Newmont reported significant increases. Shares of Novo Nordisk rose with the success of oral Wegovy in the obesity treatment market, while rival Eli Lilly lagged behind. Earnings season is entering a crucial phase, with over 90 S&P 500 companies set to report. About 75 percent of these companies have exceeded earnings forecasts, although revenue growth has slowed. Market players are looking forward to the Federal Reserve’s upcoming rate decision. No changes are expected, but there is focus on hints about future rate cuts. The Dow Jones Industrial Average, which consists of 30 major US stocks and is price-weighted, feels the impact of corporate earnings, quarterly results, and economic data. Dow Theory, created by Charles Dow, helps identify major stock market trends. It also includes trading methods like ETFs and options. As markets balance positive earnings with political anxieties, implied volatility has clearly risen. The CBOE Volatility Index (VIX) recently climbed above 17 from a low of around 13 earlier this month. This situation suggests that traders should consider strategies that benefit from price fluctuations, not just market direction.

Protecting Portfolios Amidst Rising Volatility

Gold’s rise to over $5,100 an ounce signals caution among investors, driven by concerns about tariffs and federal funding. To protect portfolios, buying put options on broad market ETFs like SPY or QQQ serves as a direct hedge against a possible downturn in the coming weeks. A similar flight to safety occurred during the budget negotiations in the fall of 2025, which rewarded those who hedged. Earnings season provides opportunities for volatility trades, especially with major tech companies reporting. While about 75% of companies have exceeded earnings estimates, this is below the five-year average of 77%, indicating that large surprises are becoming less common. Therefore, using straddles on stocks like Apple or Meta could be beneficial, allowing traders to profit from significant price moves in either direction after their announcements. Everyone will be watching for the upcoming Federal Reserve announcement for signs regarding rate cuts. According to the CME FedWatch Tool, futures markets currently suggest a roughly 60% chance of a quarter-point cut by the September 2026 meeting. If the Fed’s message seems more cautious than expected, it could lead to a sell-off, making short-term puts a smart tactical move. Specific sector trends are also revealing clear opportunities for derivative trades. The strength in gold makes call options on miners like Newmont appealing to take advantage of the current momentum. In healthcare, the performance gap between Novo Nordisk and Eli Lilly offers a chance for a pairs trade using options—buying calls on Novo while purchasing puts on Lilly to benefit from their differing results. Create your live VT Markets account and start trading now.

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The SP500 (SPX) seems to be moving into the 3rd part of a 3rd wave, which is expected to lead to a final 5th wave. Earlier predicted patterns suggest the possibility of an overlapping ending diagonal (ED), which could affect the target zone’s lower limit (~7345). Recently, the index fell unexpectedly from its peak of 6986 down to 6789, breaking through the 4th warning level and making the immediate 3rd of the 3rd-wave scenario no longer valid. Now, the index shows signs of forming a larger ending diagonal with a 3-3-3-3-3 pattern. The rally from December to January had its W-a between 0.618 and 0.764 times the previous higher rally, which fits expected ratios. If the index remains above the lows of December and November, particularly last week’s low of 6789, the 3rd wave’s W-c could begin.

Target Levels And Divergence

The 3rd wave usually targets a 123.6-138.2% extension of the 1st wave, which we now expect between 7185-7235. This aligns with the 161.8% extension at 7218. Currently, there is no divergence between the Advancing/Declining line and the price, making a bearish outlook hard to support, even with the emerging ending diagonal. Once this pattern is completed, we anticipate a multi-month correction down to around 5800 +/- 300 before aiming for over 8100. The recent drop in the S&P 500 from its January 12 high of 6986 has altered our outlook. We now think the market is forming a more complicated, overlapping pattern called an ending diagonal, suggesting a bumpy final push higher rather than a straightforward rise. This perspective is backed by the CBOE Volatility Index (VIX), which has stayed relatively low, around 15, even during last week’s dip to 6789. There are no signs of widespread panic in the market, indicating that the recent dip may be a temporary setback rather than a strong trend reversal. This decline followed an unexpectedly high inflation report from early January 2026, which briefly lowered expectations for a more lenient Federal Reserve. In the coming weeks, it’s vital to monitor key price levels to manage risk. A drop below last week’s low of 6789 would signal a serious warning to reduce bullish positions. The crucial support levels to watch are the December 2025 low of 6720 and the November 2025 low of 6521.

Market Participation And Correction Preparedness

If the index decisively moves back above 6986, it would confirm that the next upward leg is starting, creating opportunities for bullish trades. Such a break would likely lead to a rally toward the target zone of 7185-7235. Typically, the final stages of a rally, like the one in late 1999, can be quite turbulent. Importantly, overall market participation is still supporting the upward trend for now. The cumulative NYSE Advance/Decline line is following the index closely and is not showing signs of negative divergence that often happens before major market tops. Without this internal weakness, it’s hard to justify taking a strongly bearish position at this time. However, since an ending diagonal is a terminal pattern, this rally may be nearing its end. As the index approaches our 7200 target, we should prepare for a significant multi-month correction down to the 5800 area. Cautious traders might want to plan ahead by considering longer-term protective puts or VIX call options as we near new highs. Create your live VT Markets account and start trading now.

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The Monetary Authority of Singapore is likely to maintain the same parameters for the SGD NEER policy band in its upcoming review. The USD/SGD exchange rate is expected to remain above 1.2675. According to a Senior FX Strategist at DBS Bank, the three main parameters—slope, mid-point, and width of the SGD NEER policy band—will likely stay stable. Current models indicate that the SGD NEER is 0.25% below its ceiling, suggesting there’s little chance for a significant drop in USD/SGD unless the global USD weakens more broadly.

Stability Expected in 2025

In early 2025, there were strong expectations that the Monetary Authority of Singapore would keep its policies the same. The SGD was not anticipated to strengthen much, with the USD/SGD exchange rate expected to remain steady. This outlook created a calm environment for the market ahead of last year’s policy review. Looking back, the MAS did keep the slope, width, and center of its policy band unchanged throughout 2025. This decision helped keep the currency in a stable range and significantly reduced volatility. The one-month implied volatility for USD/SGD options is now close to a low of 4.3%. Such low volatility indicates that the market isn’t expecting any major surprises from the upcoming policy meeting. As we approach the meeting on January 29th this year, the economic situation supports a steady approach. Singapore’s core inflation has dropped to 2.9% year-on-year, far from its high points, relieving some pressure for further policy changes. With GDP growth expected to be a modest 2% to 3% for 2026, the central bank has little reason to disturb the market.

Derivative Trading Strategies

For derivative traders, this environment suggests that selling options to gather premiums could be a good strategy. Short straddles or strangles on USD/SGD, focusing on the current spot rate, might benefit from the anticipated stability after the announcement. Although the low implied volatility means premiums aren’t high, it also shows the market’s strong belief that the currency will stay within a narrow range. However, it’s essential to monitor the broader trend of the US dollar. Any significant shifts globally could still influence the pair. Traders might consider purchasing inexpensive out-of-the-money options as a hedge against an unexpected policy announcement or a sudden move in the dollar index. Given the current situation, any break beyond the established trading range would likely indicate a significant change in market sentiment. Create your live VT Markets account and start trading now.

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The new week begins with a noticeably different market tone. A trade that had appeared stable and well understood, built largely around yield differentials, fractured late last week, reminding participants how quickly currency dynamics can change once policy risk enters the picture.

A rate enquiry conducted by the New York Federal Reserve, acting on behalf of the US Treasury, sparked an abrupt market response.

The yen recorded its strongest single-day gain against the dollar since August, driving USDJPY sharply lower and reintroducing uncertainty into a market that had become heavily positioned in one direction.

US And Japan Hint At Intervention As Yen Swings Intensify

Signals around potential intervention did not emerge in a vacuum. Pressure on the yen has been building since October, fuelled by a sharp shift in Japan’s fiscal stance.

Prime Minister Sanae Takaichi’s promise to suspend sales tax on groceries for two years, part of an effort to shore up support ahead of the 8 February snap election, has heightened investor unease over government borrowing requirements.

Japanese government bonds rebounded for a second straight session, led by super-long maturities as market sentiment steadied after a steep selloff earlier this week triggered by PM Takaichi’s election pledge to cut taxes https://t.co/2uODzfUbXo

— Bloomberg (@business) January 22, 2026

That concern quickly filtered into bond markets. The benchmark 10-year Japanese government bond yield has risen to around 2.25%, up from roughly 1.6% when Takaichi assumed office.

With the Bank of Japan slow to respond through tighter monetary policy, the widening yield differential has weighed on the yen and encouraged sustained selling pressure.

From the US perspective, Treasury Secretary Scott Bessent has drawn a direct connection between volatility in American markets and developments in Japan.

Rising Japanese yields place upward pressure on US Treasuries, complicating efforts to keep financing costs under control. US 10-year yields have already climbed to around 4.31%, increasing sensitivity across equities and other risk assets.

Unlike previous administrations, the current leadership at the US Treasury has shown a greater willingness to engage directly in currency markets.

The recent rate check was widely interpreted as a warning rather than a one-off event. Markets are now assessing whether authorities move beyond signalling, or whether they attempt to steady sentiment through verbal guidance alone.

Market Movements Of The Week

USDJPY

– USDJPY found support at 154.15 after the sharp selloff.
– If price consolidates, the pair could test 153.35 next.
– Further downside would keep policy risk firmly priced into the pair.

US Dollar Index (USDX)

– USDX continues to trade lower from the 98.70 area and has taken out 96.804.
– If consolidation forms, further downside toward 95.819 remains possible.
– Sustained weakness would support major currencies.

Gold (XAUUSD)

– Gold has broken above 5000 following last week’s move.
– No immediate trade setup until a new pattern forms.
– Elevated FX volatility continues to underpin longer-term demand.

S&P 500 (SP500)

– The index met resistance at 6950 before gapping below 6890.
– Price has since stabilised and is trading higher again.
– A break above 6940 would be watched closely for follow-through.

Key Events This Week

29 January

1. US FOMC Statement, Forecast: 3.75%, Previous: 3.75%

Policy tone remains key amid yield volatility.

30 January

1. US PPI m/m, Forecast: 0.20%, Previous: 0.20%

Inflation pipeline in focus.

Bottom Line

The yen has transitioned from a straightforward yield-driven trade into an asset dominated by policy risk, with effects rippling through foreign exchange, bond markets and equities. Rising Japanese yields and their spillover into US Treasuries are keeping volatility elevated, while USDJPY remains the key gauge of whether policymakers are prepared to act on intervention signals.

With bond markets acting as the primary transmission channel, traders are likely to remain highly reactive in the coming week, placing greater emphasis on price action than on macroeconomic releases alone.

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Yields on long-term Japanese government bonds are on the rise, with a significant increase expected by January 2026. This surge is connected to worries about Japan’s financial situation due to new spending plans ahead of the upcoming general election. Japan’s government debt-to-GDP ratio has been decreasing, largely thanks to rising tax revenues. However, refinancing older, low-coupon bonds from a time of very low interest rates at higher rates will likely boost debt servicing costs.

fxstreet insights team observations

The FXStreet Insights Team shares observations from experts and analysts. These insights are for informational purposes only and do not constitute financial advice or recommendations. Readers should be aware of the risks of market investments, as there are no guarantees concerning accuracy or timeliness. This article’s content should not be taken as investment advice from FXStreet or its affiliates. The recent increase in long-term Japanese government bond yields presents a significant opportunity. The 10-year yield has surpassed 1.25%, a level not reached since the Bank of Japan’s aggressive easing policies began over ten years ago. Positioning for further yield increases by shorting JGB futures or buying put options on those futures seems like a wise strategy in the coming weeks. This sharp rise in domestic yields makes the Yen more appealing, reversing some of the capital outflows we saw throughout much of 2025. The USD/JPY currency pair has already fallen below 138, dropping from over 145 just weeks ago. We expect further Yen strength, suggesting that going long on JPY call options or considering short positions in USD/JPY futures would be beneficial.

impact on japanese equities and political uncertainties

Higher borrowing costs are posing challenges for Japanese stocks, as the low-cost financing that had fueled the market’s rally in 2025 begins to fade. The Nikkei 225 index has already fallen more than 5% from its recent highs in response to the bond market sell-off. It’s crucial to hedge long equity portfolios or start new short positions using Nikkei 225 futures to adapt to this new interest rate environment. The Prime Minister’s spending proposals are raising concerns about fiscal discipline, particularly as Japan’s debt-to-GDP ratio remains around 250%, despite slight improvements last year. This political uncertainty before the election is increasing implied volatility across all Japanese assets. We recommend buying straddles or strangles on major indices to effectively trade expected price movements. Create your live VT Markets account and start trading now.

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Silver prices have jumped to $117.74, boosted by geopolitical tensions and a weak US Dollar. This represents an increase of over 8% in just one day. Although it hit a record high, the price stayed below $120 and eventually settled at $112.40. The Relative Strength Index (RSI) shows that silver is overbought but does not indicate that a price drop is imminent. If silver can break through the $120 barrier, it might climb to $130 or even $150, while $100 is a key support level. Silver’s value often reacts to geopolitical instability and changes in interest rates, benefiting when the US Dollar weakens. This metal is vital across various industries due to its excellent electrical conductivity, which drives prices based on industrial demand. Traders usually connect silver price changes to those of gold. The Gold/Silver ratio helps evaluate their relative values, suggesting investment opportunities when the ratio strays from historical averages. Silver is a favored investment for portfolio diversification and as a hedge against inflation. It can be traded physically or through funds that follow its global market prices. Investors should consider many factors, such as demand, supply, and currency strength, in their trading plans. With silver recently surging past $117 an ounce, we are experiencing significant volatility that derivative traders must navigate carefully. The intense buying activity is driven by serious geopolitical issues and a rapidly weakening US Dollar. Given this steep price increase, implied volatility in silver options likely rose, making premium-selling strategies appealing but also risky. For those who believe this rally will continue, buying call options with strike prices set at $120 or $130 is one way to participate with limited risk. A more cautious strategy would be to use a bull call spread to help cover the high costs of volatile options. This approach could be profitable if silver continues its rise toward the $150 target. On the flip side, with the RSI indicating overbought conditions, traders should be ready for a potential pullback. Those expecting a correction could consider buying put options with a strike price below the critical support level at $100, betting that prices could drop into the $90s in the weeks ahead. This movement isn’t just speculation; fundamental factors are supporting it. The US Dollar Index has fallen from over 105 in mid-2025 to around 97 now, largely due to the Federal Reserve’s unexpected more dovish stance. This dollar weakness benefits all commodities priced in dollars. Additionally, recent data shows strong demand that needs to be included in trading models. Reports from last week indicated that global solar panel installations in the fourth quarter of 2025 increased by 22% year-over-year, far surpassing expectations. Investment demand is also rising, with silver-backed ETFs adding over 15 million ounces just in January. Looking back, this type of sharp rise reminds us of the spikes observed in 2022, which typically led to quick price reversals. While the current trend is robust, traders may want to implement strategies like long straddles to take advantage of large price movements in either direction. These positions are costly to establish right now but could yield substantial returns if volatility continues.

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The US Dollar has dropped to a four-month low, largely due to speculation about US-Japan efforts to stabilize the yen. The Federal Reserve is expected to announce its interest rate decision soon, with rates currently between 3.50% and 3.75%. The US Dollar has lost ground against key currencies like the Euro (EUR) and the British Pound (GBP), but it showed slight gains against the Japanese Yen (JPY). The Dollar Index is around 97.00, marking its lowest point since September 2025.

Currency Pairs Movement

In the forex market, EUR/USD is approaching 1.1880 as the USD continues to weaken, even though Eurozone economic data isn’t very strong. The GBP/USD and USD/CAD pairs are holding steady at important levels, waiting for news from the Federal Reserve and the Bank of Canada. Gold prices have soared past $5,000 amid geopolitical tensions, nearing a record high of $5,111. In 2022, central banks significantly boosted their gold reserves, purchasing 1,136 tonnes valued at about $70 billion. Gold usually moves in the opposite direction of the US Dollar and Treasury yields. Its price can be affected by global events and interest rates. A strong Dollar tends to keep gold prices steady, while a weaker Dollar can push prices higher. There is a notable shift in the currency markets as discussions of coordinated intervention to support the weak yen pick up. This makes strategies like buying puts on the USD/JPY pair attractive in the coming weeks. A joint intervention would mark a significant policy change, reminiscent of the impactful 1985 Plaza Accord. The Dollar’s fall to a four-month low suggests that many traders are reversing long positions. This situation is similar to late 2022 when speculative short positions on the yen became extreme before a sudden policy shift led to a sharp market reversal. Traders may want to use futures and options to prepare for further Dollar weakness against a range of currencies.

Federal Reserve Decision Impact

With the Federal Reserve set to announce its decision on Wednesday, we can expect an increase in implied volatility across major currency pairs. This presents opportunities for strategies like long straddles on pairs such as EUR/USD, which can profit from significant price movements in either direction. The uncertainty surrounding the Fed’s leadership only heightens the chances of sharp market swings. Gold’s rise towards its all-time high near $5,111 is directly linked to the weak Dollar and ongoing geopolitical risks. This trend is supported by substantial purchases from central banks; they added a record 1,078 tonnes of gold in 2022, and this trend continues. It may be wise to consider call options on gold futures or ETFs to take advantage of this strong momentum. Everyone should watch Thursday’s PCE deflator data, which the Fed uses to gauge inflation. Data from 2023 indicated that if core PCE dips below 3%, it could signal a pause in the Fed’s rate hikes. Another weak reading would give the Fed more reason to keep its current approach, further putting pressure on the Dollar. Create your live VT Markets account and start trading now.

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