The three drivers disrupting the markets: from gold prices to currency routes, here's what's changing this week

Confusion is not accidental – three distinct forces are rewriting the rules of the game in global financial markets. As 2025 kicks off with a fragmented setup, gold, oil, and currencies are simultaneously under pressure from contradictory logic. On one side, geopolitical fears and volatility in international bond auctions; on the other, the persistent strength of the US dollar. The result? A puzzle where each piece moves in a different direction. This week will be decisive in understanding which narrative will prevail.

When central banks shout in different choruses: here is the first pivot

The main central banks worldwide have never been so misaligned. The European Central Bank remains in the conservative camp, with economists hypothesizing core inflation in the Eurozone at 2.4% in December – a figure that does not push toward aggressive cuts. German Bund yields have softened, falling by 1.5 basis points to 2.90%, reflecting expectations of a static ECB in the near future.

However, Japan sings a completely different tune. The yield on Japanese 10-year government bonds broke a psychological barrier on Tuesday: 2.10% was pulverized, with the local gold ounce price under pressure as the rate rose to 2.125%, the highest since February 1997. The trigger? This week’s auction of 10- and 30-year bonds generated upward pressure that no one will easily stop.

Meanwhile, the US plays at an intermediate speed. The 10-year US Treasury yield dipped slightly by 0.55 basis points on Monday, settling at 4.173%, but remains technically well above the 20-period moving average (4.157). The MACD indicator suggests that the upward movement has not yet lost all momentum – it is only in a consolidation phase.

The second element: when gold prices and geopolitical uncertainty shake hands

Last Sunday, the US moved a pawn in Venezuela – the arrest of President Maduro shook markets like an earthquake. WTI crude oil price plummeted to $56.31 (the lowest since December 19), while gold found a temporary home around $4,420 per ounce. These are not random movements: they were visceral reactions to a scenario of energy supply shock and risk aversion.

WTI rebounded to $57.72 thanks to supply uncertainty, but remains fragile. The 4-hour chart suggests a possible bullish reversal (the MACD is oversold and could cross upward), but the test of the 60-period moving average will be the real test. At resistance of $58.50–$59.00, we will see if the rebound has legs or if it’s just a nervous jolt before further declines.

For gold, the situation is paradoxical: geopolitical fears and pressure on Treasury yields should support it, yet the strength of the dollar restrains it. Gold per ounce has shown some resilience above $4,420, but to truly attract buyers, it will need to break decisively above the recent high of $4,430–$4,440. Support remains anchored at $4,380–$4,400.

The third factor: bond supply pressure and shockwaves on currencies and commodities

This week, the Eurozone will issue about €33 billion in new bonds (Germany, France, and other frontline countries), while Japan relies on its 10-year auctions to calibrate expectations. The simple but powerful consequence: more supply = downward pressure on prices = yields rising.

The dollar index (DXY) hit a high since December 10 at 98.80, currently around 98.64. This strength is not accidental – the relative advantage of US yields over other global players fuels demand for refuge in the US currency. The euro/dollar is the victim: falling below the psychological threshold of 1.1700, it is visibly suffering. The dollar/yen remains at 156.63, with carry traders still well positioned despite the jump in JGBs – the dominance of the US dollar remains unchallenged for now.

The next move: US non-farm data as a watershed

On Friday, US non-farm payroll data will likely change the course. If higher than expected, they will boost US Treasury yields and draw an even stronger dollar – with the 98.75–98.80 area as the first upward target for the DXY index.

For euro/dollar, the 1.1700 level remains the boundary between stability and further downward pressure. Gold per ounce will continue to dance between support at $4,380 and resistance at $4,430–$4,440 until the macro picture clarifies. Meanwhile, WTI crude oil awaits the results of Japanese auctions and developments in Venezuela before deciding whether $58.50–$59.00 is a true resistance or just a passing station.

The lesson of this week is simple: in a context where central banks are not singing in the same rhythm and geopolitical risks bounce like ping-pong balls, no correlation is sacred and no price is carved in stone. The traders who will win are those who quickly read the resonance effects between macroeconomic data, auction results, and external shocks.