Gold Drops and the Dollar Rises Before the Warsh Speech – Asia Market Wrap

The Dollar strengthened against all of its G10 peers as investors awaited speeches from several major central bank officials, including Fed Chair Warsh, while markets increased bets that the Fed could raise interest rates.

Dollar Spot Index rose 0.2%, extending last quarter’s 0.6% gain. The Yen weakened 0.1% to 162.77 per Dollar after falling to a 40-year low earlier this week, while the South Korean Won slid toward its weakest level since the Global Financial Crisis amid continued foreign selling of local equities.

Gold fell 0.8% to around $3,975 an ounce as expectations for higher US interest rates reduced demand for the non-yielding metal. Silver and platinum also declined. Asian equities traded mixed, while Treasuries were little changed after the US 10-year Treasury yield surged 9 bps on Tuesday.

The Won briefly weakened as much as 0.6% to 1,559.10 per Dollar, remaining close to last month’s 2009 low.

Meanwhile, the Yen stayed under pressure after breaking through ¥162 per Dollar, with strategists increasingly identifying ¥163 and beyond as the next key levels, as markets speculated Japanese authorities may tolerate a weaker currency than during their 2024 intervention campaign. Japan’s top currency official, Mimura, refrained from repeating the Finance Ministry’s usual warning that authorities stand ready to take decisive action in the foreign exchange market at any time. The softer rhetoric was viewed as a less aggressive intervention stance, despite the Yen remaining near its weakest level since 1986.