Gold continued to set new record highs last week, surging as volatility increased following comments from President Trump. His remarks about taking control of Greenland initially triggered a sharp sell-off in U.S. stocks, which later reversed after threats of tariffs on Europe were withdrawn. The U.S. dollar erased all of its gains from the start of the year, falling sharply as concerns grew about the direction of U.S. policy, even though U.S. GDP came in above expectations.
In Japan, the Prime Minister announced on Monday that an early parliamentary election would be held on February 8 to seek a fresh mandate for her new coalition. The government also proposed cutting the consumption tax on food (currently 8%) to 0% for two years, which unsettled investors and pushed bond yields higher. The Bank of Japan kept interest rates unchanged, and the yen weakened as markets priced in a slower pace of future rate hikes. Shortly afterward, USD/JPY fell sharply on reports that the BoJ was checking market rates ahead of possible intervention, prompting speculators to sell the pair.
Equities in the U.S. and Japan were under pressure for most of the week but managed to close with only modest losses.
Markets This Week
U.S. Stocks
Volatility increased in U.S. stocks last week after a sharp early sell-off triggered by fears over U.S. tariffs. The market recovered quickly, however, after President Trump backtracked on his comments. While the broader trend remains range-bound, price action is showing some signs of weakness. For now, the better short-term approach is to take advantage of the volatility by selling into strength and buying on dips until a clearer trend develops. Resistance is seen at 49,500 and 50,000, while support is located at 48,500, 48,000, 47,500, and 47,000.
Japanese Stocks
Concerns over Japan’s government finances ahead of next month’s election weighed on the Nikkei last week. The Bank of Japan meeting had little market impact, but rumors of possible currency intervention strengthened the yen and pushed the Nikkei lower by the end of the week. With the yen firming, the index may struggle to make new record highs in the near term, suggesting more sideways to slightly lower price action in the coming week. Resistance is seen at 54,000円, 54,500円, and 55,000円, while support is located at 52,500円, 51,500円, and 51,000円.
USD/JPY
USD/JPY rose for most of the week as concerns that the Japanese government may expand fiscal spending pushed bond yields higher. The Bank of Japan kept interest rates unchanged and offered little clarity on the timing of future hikes, allowing USD/JPY to climb above 159. Late on Friday, however, rumors that the BoJ was checking market rates ahead of possible yen-buying intervention triggered a sharp sell-off during London trading, with heavy speculative selling into the close. In the short term, the pair looks oversold, suggesting a potential recovery at the start of the week as markets look for confirmation of any intervention. However, confirmed action by the BoJ could send USD/JPY sharply lower. Resistance is seen at 157.5, 158, 159, 159.5, and 160, while support is located at 155.5, 155, 154.5, and 154.
Gold
Gold had a very strong week as a weaker U.S. dollar and President Trump’s comments increased geopolitical risks and boosted buying. Prices are now close to the $5,000 level, which could lead to short-term profit-taking. However, a clear break above $5,000 could trigger another sharp move higher. Over the medium term, the trend remains bullish, and buying pullbacks—especially toward the 10-day moving average—still looks like the better approach. Resistance is seen at $5,000, $5,500, and $6,000, while support is located at $4,900, $4,800, $4,750, and $4,700.
Crude Oil
WTI crude held recent gains above $60, supported by ongoing unrest in Iran and an improving technical picture, with the 10-day moving average now turning higher and providing support. As long as prices remain above $59, the outlook favors further upside. Resistance is seen at $65, $66.50, $70, and $75, while support is located at $59, $55, and $50.
Bitcoin
Bitcoin had a disappointing week, failing to test resistance at $100,000 as weaker risk appetite led to a pullback. The short-term outlook has turned bearish, but support near $85,000 is close and may hold in the coming week. Resistance is seen at $95,000, $100,000, and $105,000, while support is located at $85,000 and $80,000.
This Week’s Focus
- Monday: U.S. Durable Goods Orders
- Tuesday: Japan BoJ Core CPI, U.S. CB Consumer Confidence
- Wednesday: Japan Monetary Policy Meeting Minutes, Australia CPI, U.S. Fed Interest Rate Decision
- Thursday: U.S. Trade Balance and Factory Orders
- Friday: Japan Tokyo Core CPI and Industrial Production, Australia PPI, E.U. GDP, U.S. PPI and Chicago PMI
Volatility is expected to increase in the week ahead as gold challenges the $5,000 level and markets speculate on the timing of potential yen intervention by the Bank of Japan. Equities are likely to remain cautious amid the risk of renewed selling. The upcoming FOMC meeting will be in focus, with interest rates expected to remain unchanged, while U.S. Durable Goods Orders data on Monday could provide an early signal on economic momentum.
