Gold extends decline below $2,900

Asian Markets

Japan's aging population has long been a cautionary tale for economies worldwide, and the situation continues to worsen. New births fell below 1 million for the first time in 2016 and have only declined further since, raising concerns about long-term economic stability.

Meanwhile, the Japanese Yen (JPY) remains under pressure, struggling against the US Dollar through Thursday’s Asian session. However, rising Japanese Government Bond (JGB) yields are offering some support as markets price in further interest rate hikes by the Bank of Japan (BoJ) amid broadening inflation concerns.

Investors remain focused on whether the BoJ will scale back bond-buying operations, as hinted at by Governor Kazuo Ueda last week.

China is stepping up scrutiny over overseas investments by domestic firms and the use of proceeds from Hong Kong share sales, signaling tighter capital controls. Last month, Chinese commercial banks sold the highest amount of foreign exchange since July 2023, reflecting increased demand for foreign currency and further pressure on the Yuan (CNY).

Meanwhile, China Evergrande Group’s troubles deepen, as liquidators have been appointed for its subsidiary, Tianji Holding, following a winding-up order from Hong Kong's High Court. Evergrande’s stock trading has been suspended.

EUR/USD

The Euro (EUR/USD) weakens to around 1.0465 in Asian trading after US President Donald Trump threatened to impose 25% tariffs on the European Union. The renewed trade tensions are adding downside pressure to the euro, as markets assess the potential impact on EU exports and economic growth.

Commodities

Gold extends its losses during the Asian session, dropping below $2,900, retesting its lowest level in over a week. The US Dollar (USD) continues to strengthen, supported by a second consecutive day of gains in US Treasury yields.

A generally positive risk sentiment is also dampening demand for the precious metal, pressuring gold prices further.