USDX Stalls Near Lows as Gold Hits Record $5,600 Peak

The EUR/USD pair declined Wednesday, sliding more than 0.30% after the Federal Reserve left interest rates unchanged and Chair Jerome Powell reinforced a cautious, data-dependent policy stance.

Following the Federal Open Market Committee (FOMC) decision, Powell avoided political commentary during his press conference and declined to address questions regarding his future at the Federal Reserve once his term expires. On monetary policy, he emphasized broad support for keeping rates steady, reiterating that future decisions will depend on incoming economic data and be assessed on a meeting-by-meeting basis.

Powell noted that labor market conditions have stabilized, while inflation remains somewhat elevated.

Supporting the US Dollar, Treasury official Scott Bessent said in an interview with CNBC that US authorities do not intervene in currency markets to influence the Japanese yen. He reaffirmed that the United States maintains a “strong dollar policy,” clarifying that such a stance is rooted in sound economic fundamentals rather than direct market intervention.

In the Eurozone, German GfK Consumer Confidence improved for February, offering modest support to the euro. However, European Central Bank (ECB) officials expressed concerns that sustained US Dollar weakness could drive euro appreciation and push Eurozone inflation below the ECB’s 2% target.

Gold prices remain firmly supported near record levels during early European trading on Thursday hovering just below the $5,600 mark amid persistent demand for safe-haven assets. Heightened geopolitical risks and economic uncertainty continue to drive inflows into the precious metal, extending its parabolic rally to a ninth consecutive session and pushing gains to more than 10% since the start of the week.

Despite hawkish remarks from Fed Chair Jerome Powell following Wednesday’s decision to keep interest rates unchanged, bullion has shown little sensitivity to tighter monetary rhetoric. Even a generally positive tone in global equity markets has failed to curb gold’s advance, underscoring the strength of the current bullish trend.

Renewed concerns over the global economic outlook resurfaced after Germany, the Eurozone’s largest economy, downgraded its growth forecasts for both this year and next, reviving fears linked to the lingering impact of last year’s US tariff increases.

Geopolitical tensions remain elevated. US President Donald Trump warned Iran to re-enter negotiations over its nuclear program or face significantly harsher military action. Tehran responded by threatening retaliatory strikes against the US, Israel, and their allies. Elsewhere, Russia continued aerial attacks on Ukrainian cities and infrastructure, with a recent drone strike hitting a passenger train in northeastern Ukraine and killing five people.

These developments, combined with renewed selling pressure on the US Dollar, helped gold extend its record-breaking rally during the Asian session, briefly pushing prices toward the $5,600 area.

Looking ahead, market participants will monitor US Weekly Initial Jobless Claims for short-term direction. However, the broader macro and geopolitical landscape remains decisively favorable for gold bulls, keeping record highs firmly within reach.

Oil prices climbed more than 1% during Asian trading on Thursday, extending gains for a third consecutive session as rising geopolitical tensions stoked fears of potential supply disruptions in the Middle East. Markets remain on edge amid growing speculation that the United States could carry out military action against Iran, a major regional producer.

The rally comes as US President Donald Trump intensifies pressure on Iran to halt its nuclear program, including renewed threats of military strikes, alongside the deployment of a US naval group to the region. Iran, the fourth-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), currently pumps about 3.2 million barrels per day, making any disruption a significant risk to global supply.

According to a Reuters report citing US officials familiar with the matter, President Trump is weighing options to target Iranian security forces and leadership in an effort to trigger internal unrest and potentially destabilize the current regime.

Additional support came from supply-side developments in the United States. Weather-related production disruptions and an unexpected drawdown in crude inventories eased concerns about excess supply, Sachdeva added.

US crude stockpiles fell by 2.3 million barrels to 423.8 million barrels in the week ended January 23, according to data released by the Energy Information Administration on Wednesday. Analysts surveyed by Reuters had expected an increase of 1.8 million barrels, making the drawdown a bullish surprise for the market.

US equities closed largely unchanged on Wednesday after the Federal Reserve kept interest rates steady, as widely expected, and Chair Jerome Powell declined to comment on an investigation involving the central bank and the Trump administration.

The Federal Reserve left its benchmark policy rate unchanged, marking a pause after three consecutive 25-basis-point rate cuts. While the decision itself was anticipated, markets were closely watching to see whether Powell would address reports surrounding a US Department of Justice investigation into the renovation of a Federal Reserve building.

Powell declined to discuss the matter, referring reporters to an earlier statement in which he suggested the probe was politically motivated and linked to his refusal to align interest rate policy with President Donald Trump’s preferences.

Corporate earnings remain a key focus this week, particularly from the so-called “Magnificent Seven” technology giants. Tesla, Meta Platforms, and Microsoft was scheduled to report results after Wednesday’s closing bell, with Apple set to follow on Thursday.

Given their heavy weight in major equity indices, investor sentiment is likely to hinge on management commentary around artificial intelligence investment, cloud computing demand, and consumer spending trends.

Chipmakers outperformed after ASML Holding reported record quarterly orders, providing fresh momentum for the AI trade. The Dutch semiconductor equipment maker also announced plans to cut around 1,700 jobs, primarily in the Netherlands, while issuing current-quarter revenue guidance that exceeded expectations.