Gold extends Rally past $2,950

Asian Markets

A key focus in early Thursday trading has been the Japanese yen's sharp appreciation, with USD/JPY breaking below a critical support zone. The move appears disconnected from any major economic release or policy shift, raising questions about potential positioning shifts or technical triggers. One factor in play is the narrowing yield spread between US and Japanese 10-year bonds, which has been exerting downward pressure on the currency pair in recent sessions.

Fresh labor market data from Australia showed a stronger-than-expected increase in employment for January, with job additions more than doubling median forecasts. While the unemployment rate ticked up 0.1 percentage points, the labor force participation rate climbed to a record high, reinforcing optimism about Australia’s economic resilience.

The People’s Bank of China (PBoC) held steady on its key interest rates, leaving the 1-year and 5-year loan prime rates unchanged at 3.1% and 3.6%, respectively. The move aligns with expectations, as Beijing maintains its cautious stance on monetary policy while monitoring economic growth trends.

European Markets

The latest Producer Price Index (PPI) data from Germany came in weaker than anticipated, declining by 0.1% in January compared to expectations of a 0.6% increase. On an annual basis, producer prices rose 0.5%, missing the forecasted 1.2% and marking a slowdown from the previous 0.8% reading. This underwhelming inflation signal highlights ongoing demand challenges in Germany’s industrial sector. However, the market reaction has been muted, as broader macro themes dominate sentiment.

The euro remains stable against the US dollar, with EUR/USD hovering above 1.0450 during European trading. Broader dollar weakness is lending support to the pair, but trade policy uncertainties, including potential tariffs from the US, could limit further upside. Market participants are also keeping a close eye on US economic data and Federal Reserve commentary for additional cues.

Gold

Prices continue their upward momentum, reaching fresh all-time highs above $2,950 per ounce. The rally is being fueled by escalating concerns over US trade policy, with investors weighing the implications of potential tariff measures from Washington. A dip in US Treasury yields has also kept dollar bulls on the sidelines, providing additional tailwinds for the precious metal.

As markets digest these developments, upcoming US data releases and Fed commentary will be key in shaping short-term price action across major asset classes.