Gold Hits Record High Amid Risk-Off Sentiment and Yen Rally

Gold reached another record high, gaining 12% year-to-date, as investors sought safe-haven assets amid geopolitical tensions and tariff concerns. The yen strengthened to its highest level since early December, supported by expectations of another Bank of Japan rate hike. European stocks are set to open cautiously after the STOXX 600 fell nearly 1% on Wednesday, while markets await earnings from Mercedes-Benz, Renault, Airbus, and Lloyds Banking.

Equities

The FTSE 100 fell 0.6% on Wednesday, hitting its lowest level in over a week, while the FTSE 250 dropped 0.8% to a two-week low. Investors adjusted their expectations for Bank of England rate cuts after UK inflation rose to a 10-month high of 3.0% in January, exceeding forecasts. Interest rate futures now suggest just over two quarter-point cuts by December, down from expectations earlier in the week.

Glencore was the biggest faller on the FTSE 100, with its shares dropping 7.3% after reporting lower earnings and a $2.3 billion impairment charge. The company also announced it is considering moving its primary listing away from London. Trainline shares fell 7.7% after J.P. Morgan downgraded the stock to ‘neutral’ from ‘overweight’. Jet2 warned of pressure on profit margins due to high inflation pushing up costs and dampening consumer spending on holidays, sending its shares down 10.6%. EasyJet and Wizz Air both lost around 4%.

In the US, the S&P 500 rose 0.24%, reaching a record closing high for the second day in a row, while the Dow Jones added 0.16% and the Nasdaq edged up 0.07%. Investors focused on the Federal Reserve’s January meeting minutes, which highlighted concerns over inflation and the potential impact of new US tariffs. The Commerce Department reported a sharp 9.8% drop in housing starts in January, with weak demand and high mortgage rates weighing on the sector. Housing stocks underperformed, with the sector’s index falling 1.5%.

Among US companies, Nikola shares plunged 39.1% after the electric truck maker filed for Chapter 11 bankruptcy protection. Celanese fell 21.5% after reporting a quarterly loss. Payment processing company Shift4 dropped 17.5% after announcing a $2.5 billion acquisition of Global Blue, whose shares jumped by the same amount. Analog Devices gained 9.7% after posting stronger-than-expected quarterly profit and revenue.

Forex & Commodities

The yen climbed to a two-month high, rising 0.8% to 150.15 per dollar, as investors raised bets on further Bank of Japan rate hikes this year. Comments from BOJ Governor Kazuo Ueda, who did not express concern over rising yields, fuelled expectations that monetary tightening could come sooner. Sterling was steady near a two-month high at $1.2597, while the euro edged up 0.06% to $1.0428. The dollar weakened, with the dollar index falling 0.16% to 107.01, as traders remained cautious about the impact of President Trump’s tariff plans.

Gold reached another record high, rising 0.5% to $2,945.83 per ounce, after touching $2,947.11 earlier in the session. It has gained 12% in 2025 so far, supported by strong demand from central banks and inflation concerns linked to Trump’s tariff policies. US gold futures rose 0.9% to $2,963.80. Analysts expect gold to test the $3,000 level if economic uncertainty persists.

Oil prices held steady after reaching a near one-week high. Brent crude was up 20 cents at $76.24 per barrel, while US West Texas Intermediate crude fell 30 cents to $71.95. A 3.34 million barrel rise in US crude stockpiles, reported by the American Petroleum Institute, put downward pressure on prices. Markets await official inventory data from the US Energy Information Administration, which is expected to confirm a fourth consecutive weekly build in crude supplies. Russia reported a temporary 30%-40% drop in Caspian Pipeline Consortium oil flows after a Ukrainian drone attack on a pumping station, but expectations of resumed oil exports from Iraq’s Kurdistan region helped offset supply concerns.