Gold Slumps as USDX Recovers on Possible Aversion of US Shutdown

EUR/USD trades firmer near 1.1965 during the early Asian session on Friday as uncertainty surrounding US trade policy and concerns over the Federal Reserve’s independence continue to pressure the US Dollar.

The Greenback came under selling pressure earlier in the week after US President Donald Trump appeared to downplay the Dollar’s weakness. Although the currency recovered some ground following comments from Treasury Secretary Scott Bessent reaffirming Washington’s strong-dollar stance, lingering concerns over policy volatility in the United States remain a headwind for the USD and supportive for the pair in the near term.

Market participants remain cautious amid ongoing uncertainty around US trade and geopolitical strategies.

Additional pressure on the Dollar emerged after President Trump said he would announce his nominee for Federal Reserve Chair next week, reiterating expectations that the new leader would favor lower interest rates. These remarks have renewed investor concerns about the independence of the US central bank, potentially adding to downside risks for the USD.

Looking ahead, traders will monitor the preliminary fourth-quarter GDP figures from the Eurozone and Germany, due later on Friday, along with Germany’s flash Consumer Price Index (CPI). Weaker-than-expected data could limit the Euro’s upside. On the US side, attention will turn to the Producer Price Index (PPI) report and remarks from Federal Reserve official Alberto Musalem.

Gold prices edged lower during early Asian trading on Friday, extending losses after a volatile previous session marked by record highs and sharp pullbacks, as safe-haven demand mixed with profit-taking weighed on prices.

Despite the pullback, bullion remained on course for a strong monthly performance.

Gold surged to a record high near $5,600 per ounce on Thursday after reports suggested the United States was preparing additional military action against Iran, boosting demand for safe-haven assets amid heightened geopolitical tensions. Other precious metals also cooled after sharp swings earlier in the week.

Elevated geopolitical risks—particularly tensions involving the United States and other major global powers—have fueled demand for precious metals and other physical assets. A sharp decline in the US Dollar, amid rising concerns over the country’s fiscal outlook, has further supported the metals complex, alongside uncertainty surrounding the future path of US interest rates.

Silver, platinum, and palladium also benefited from broad-based metal buying in January, with silver emerging as the standout performer.

Oil prices edged lower in Asian trading on Friday after the Trump administration eased certain sanctions on Venezuela’s energy sector, raising the prospect of additional crude supplies entering the market.

Investors remained cautious amid ongoing geopolitical tensions in the Middle East, particularly the risk of potential US military action against Iran, while also awaiting a key OPEC+ meeting scheduled for the weekend.

Crude prices had recently climbed to near six-month highs amid fears that escalating Middle East tensions, a severe snowstorm in the United States, and a major production outage in Kazakhstan could disrupt global supply.

On Thursday, the Trump administration lifted restrictions on certain transactions involving Venezuela’s state-run oil company, PDVSA, allowing a US entity to sell and transport Venezuelan oil. The move appeared aimed at encouraging greater participation by American companies in Venezuela’s energy sector, a goal President Trump has repeatedly emphasized following Washington’s takeover of the country’s oil industry earlier this month.

However, the decision stopped short of lifting sanctions related to Venezuelan oil production, limiting the immediate impact on output levels.

Attention now turns to Sunday’s OPEC+ meeting, with recent reports suggesting the group is likely to keep production levels unchanged.

U.S. stocks closed mixed on Thursday, with the US 500 and the tech-heavy US Tech 100 finishing lower as investors digested a fresh round of earnings and grew increasingly uneasy about whether heavy spending on artificial intelligence will deliver returns for mega-cap technology firms.

While major indexes pared steeper losses late in the session, weakness in the technology sector weighed on broader markets. Microsoft emerged as the biggest drag on the US 500, with shares plunging 10% after the software giant reported softer-than-expected cloud revenue, intensifying concerns that substantial investments tied to its OpenAI partnership may take longer to pay off. The selloff spread across the software space.

After the closing bell, Apple shares were volatile in extended trading, edging up less than 1% after the company beat quarterly revenue estimates on a sharp rebound in China. CEO Tim Cook described demand for the latest iPhone as “staggering.”

Among other mega-caps, Tesla shares dropped 3.5% after the electric-vehicle maker outlined plans to more than double capital expenditures to a record level.

Elsewhere, Caterpillar rose 3.27% after posting higher-than-expected profit, while Mastercard climbed 4.3% after beating fourth-quarter earnings estimates and announcing plans to cut about 4% of its global workforce.