Precious Metals Prices React to Geopolitical and Rate Outlook

Gold prices wavered after facing pressure earlier in the week from rising oil prices, which had fueled concerns over further central bank tightening. The precious metal found some stabilization as crude prices eased and the US Dollar softened amid signs of potential de-escalation talks between the United States and Iran. Silver prices also declined during Friday's trading session.

US Dollar Weakens as Fed's Next Move Remains in Focus

The US Dollar Index continued its multi-day decline, although it staged a modest recovery against currencies like the British Pound and New Zealand Dollar during the session. While some analysts believe the Federal Reserve has signaled no near-term rate hikes are planned, other officials continue to express concern over persistent inflation risks. A structurally widening US trade deficit, driven by imports for the AI sector, is also being watched as a potential long-term factor for the dollar.

Oil Market Volatility Eases but Demand Forecasts Hold Firm

Crude oil prices retreated from recent highs as markets priced in a reduced geopolitical risk premium on hopes of US-Iran de-escalation. However, physical market constraints, including elevated shipping insurance costs for passage through the Strait of Hormuz, continue to be a factor. Separately, the International Energy Agency (IEA) maintained its forecast for a significant year-over-year rise in global oil demand for the fourth quarter, while cutting its Russian output forecast.

Japanese Yen Surges on Potential Domestic Investment Shift

The Japanese Yen registered a broad-based rally, becoming a top performer among G10 currencies following government comments encouraging a policy shift toward greater domestic investment. The proposed pivot, which would affect Japan's large government pension fund, is seen as a move to reverse long-term capital outflows and lent significant strength to the yen. Consequently, currencies like the Euro and British Pound retreated sharply against the yen from recent highs.