Gold and silver soar to records as yen volatility rattles markets

​Gold and silver hit fresh records

Gold trading broke decisively above $5000 an ounce at the start of the week, a new milestone driven by safe haven demand. Silver jumped more than 4% to a fresh record, having now risen over 50% this month.

​The moves reflect concerns about currency stability and rising geopolitical tension. When confidence in fiat currencies weakens, investors pile into hard assets, and that's exactly what's happening now.

​A weaker United States (US) dollar provided further support, with the greenback at four-month lows. Dollar weakness typically makes commodities more attractive to international buyers.

​The rally shows no sign of slowing. Precious metals are acting as insurance against policy uncertainty and intervention risks, with demand outstripping supply at current price levels.

​Yen surges on intervention fears

​The Japanese yen jumped to a two to four-month high around 154 per dollar after sharp Friday spikes prompted speculation about US-Japan intervention. The Federal Reserve Bank of New York conducted rate checks, a technical step that often precedes currency action.

​No direct intervention materialised, but the threat alone was enough. Traders rapidly unwound short yen positions, leaving the currency roughly 3% stronger than Friday's lows.

​Japanese authorities have repeatedly warned about excessive yen weakness. The Bank of Japan's (BoJ) ultra-loose policy keeps downward pressure on the currency, but intervention threats can reverse moves quickly.

​The message is clear: further yen weakness risks coordinated action. Markets are repositioning more cautiously on the currency as a result.

​Dollar slides across the board

​The dollar index hit a four-month low, with weakness spreading beyond the yen. The Korean won gained 1.5% while the Singapore dollar hit multi-year highs.

​Concerns about Federal Reserve (Fed) independence and US policy direction are weighing on the greenback. Political pressure on the central bank has added a risk premium that wasn't there before.

​The dollar remains the world's reserve currency, but confidence is being tested. This week's Fed meeting will be crucial for determining whether the sell-off continues.

​Equities under pressure

​The stronger yen hit Japanese stocks hard, with the Nikkei 225 down nearly 2%. Exporters face squeezed profit margins when a rising currency erodes overseas earnings.

​US and European equity futures edged lower as risk appetite faded. Currency volatility and geopolitical tension have made investors more cautious about holding equities at stretched valuations.

​Fed meeting and earnings ahead

​Markets expect no rate change this week, but Fed guidance is critical. Commentary on central bank independence and any response to political pressure will be closely watched.

​Investors want reassurance that the Fed sets policy based on data, not politics. Doubts on this front have contributed to dollar weakness and safe haven demand.

​Big tech earnings take centre stage alongside the Fed. Results and guidance on artificial intelligence (AI) spending, margins and demand will determine whether current valuations are justified.

​Oil holds gains on Iran pressure

​Oil prices remain elevated after last week's rally. Fresh US sanctions on Iranian oil shipments have raised supply disruption risks.

​Brent crude oil is holding above recent highs despite softer risk appetite elsewhere. Geopolitical premiums in oil tend to be sticky when supply threats are real rather than speculative.

​Middle East escalation risks keep a floor under prices. Traders are balancing this against weaker growth concerns, a tension that's characterised commodity trading for months.

​Any disruption to Iranian exports would tighten supply further, though the impact depends on whether other producers step in to fill the gap.