War Risks Fuel Gold Surge and Euro Decline

 

Gold was on track for its biggest weekly gain in almost eight months on Friday, while the euro remained near a 13-month low, as Russia lowered its threshold for nuclear weapon use and launched a hypersonic missile at Ukraine.

The rising risk of escalation also pushed European gas prices to a one-year high, prompting investors to seek safe havens. This resulted in stronger German debt and a boost for the Swiss franc, which was on course for its first weekly rise in two months.

In Asia, chipmaker stocks saw a slight increase, fueled by Nvidia’s record high in U.S. trade, with shares in Taiwan and South Korea rising over 1%, and the Nikkei gaining 0.8%.

Gold held steady at $2,677 an ounce, up more than 4.5% for the week, while Bitcoin neared the $100,000 mark for the first time. Meanwhile, assets tied to Adani Group companies continued to struggle, with dollar bonds facing losses after the chairman, Gautam Adani, was indicted for fraud by U.S. prosecutors.

Russia’s recent nuclear escalation came after the U.S. and UK allowed Ukraine to strike Russian territory with western weapons. In retaliation, Russia launched a hypersonic missile at Ukraine’s Dnipro. Analysts noted that these missiles could carry nuclear warheads, further fueling concerns about oil supply disruptions. Brent crude futures rose nearly 4.5% for the week, touching a two-week high of $74.44 a barrel.

The euro has faced consistent losses, down for seven of the past eight weeks, amid challenges such as U.S. tariffs, slowing economic growth, and political instability in Germany and France. The euro was close to breaking its support level at last year’s low of $1.0448.

Meanwhile, the dollar index was poised for a 0.4% weekly gain, trading at 107.05, while S&P 500 futures remained flat. Benchmark 10-year Treasury yields held steady at 4.432%, maintaining their position for the week.

Markets are now pricing in a 58% chance of a Fed rate cut, down from 83% a week ago. In Japan, core inflation remained above the central bank's 2% target in October, raising expectations of a rate hike. The markets are now pricing in a 57% chance of a 25 basis point rate increase by the Bank of Japan in December, which has added some volatility and support for the yen. The yen, which had fallen 4% this quarter, was trading higher at 154.38 per dollar.

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.