Gold Continues to Surge; AI Profit Doubts Sink Tech, Japan Rally Cools

The EUR/USD pair fell on Tuesday as renewed political instability in France and uncertainty over the U.S. government shutdown weighed on market sentiment.

The resignation of Prime Minister Lecom has cast doubt over the country’s 2026 fiscal budget, with lawmakers struggling to reach consensus on measures to stabilize public finances.

If a budget fails to pass, France’s National Assembly may resort to a temporary spending rollover law, allowing the government to extend 2025 expenditures to avert a shutdown similar to that facing the U.S. However, the measure is only a stopgap and underscores the growing fiscal uncertainty across Europe.

In the U.S., the New York Fed Survey of Consumer Expectations (SCE) revealed that households expect higher inflation over the next year, with median one-year inflation expectations climbing from 3.2% to 3.4%.

Money markets continue to price in a 25-basis-point rate cut at the October 29 Fed meeting, with odds standing at 95% according to CME Fed Watchtool.

European Central Bank President Christine Lagarde expressed hope that France will deliver a budget on time, stressing the importance of fiscal stability within the euro area. She also reiterated her view that the euro should play a stronger global role, arguing that the bloc remains too exposed to economic shocks originating in Washington.

The EUR/USD remains under pressure as traders weigh the dual headwinds of European political risk and U.S. inflation persistence.

Gold prices climbed above the $4,000 per ounce mark for the first time on Tuesday, boosted by expectations of a Federal Reserve rate cut later this month and persistent safe-haven demand amid the ongoing U.S. government shutdown.

The rally underscores investors’ growing appetite for safe-haven assets as political gridlock in Washington enters its seventh day. The shutdown has delayed the release of several key U.S. economic indicators, pushing traders to rely on alternative data sources to assess the timing of potential Fed policy moves.

So far this year, gold has surged 51%, driven by a combination of Fed rate cut expectations, political and economic instability, robust central bank purchases, ETF inflows, and a weaker U.S. dollar.

Beyond the U.S., political unrest in France and Japan has rattled global currency and bond markets, reinforcing the appeal of gold as a store of value.

In China, the People’s Bank of China added to its gold reserves for the 11th consecutive month in September, reflecting continued official sector demand.

With both monetary policy uncertainty and political turbulence lingering across major economies, analysts suggest gold’s record-breaking run could continue.

Oil prices rose in Asian trading on Wednesday, supported by a mixed U.S. inventories report and continued focus on the broader global supply outlook, with a modest OPEC+ production increase due to take effect in November.

Data from the American Petroleum Institute (API) showed U.S. crude inventories rose by 2.78 million barrels for the week ended October 4, exceeding forecasts for a 2.25 million-barrel increase. The build marks a reversal from the previous week’s 3.67 million-barrel draw, suggesting a potential softening in demand—a typically bearish signal for prices.

However, gasoline and distillate inventories both declined, by 1.3 million and 1.8 million barrels, respectively, pointing to steady fuel consumption even as refiners scale back activity for seasonal maintenance.

Traders now await the U.S. Energy Information Administration’s (EIA) official report due later Wednesday for confirmation.

With OPEC+ restraint offset by robust U.S. production and elevated inventories, oil markets remain finely balanced. Traders are watching for confirmation of the API data and further guidance from OPEC+ ministers, as well as signals from the Fed and global economic data that could shape demand prospects in the fourth quarter.

U.S. stocks ended lower on Tuesday, as technology shares retreated following a sharp rally. A slide in Oracle weighed on sentiment, cooling enthusiasm over the AI-driven market rebound.

Oracle Corp. fell more than 2% after The Information reported that internal documents pointed to weaker-than-expected margins in its cloud business, partly due to $100 million in costs tied to renting Nvidia chips. The report stoked concerns that the company’s profitability may lag Wall Street expectations.

Tech heavyweight Alphabet also lost over 1%, adding to the sector’s weakness. Advanced Micro Devices, however, extended gains on optimism surrounding its partnership with OpenAI, which investors see as a potential driver of AI-related chip demand.

In contrast, Dell Technologies surged almost 4% after raising its long-term growth targets ahead of an investor meeting.

The ongoing U.S. government shutdown entered its second week, delaying key economic data releases and complicating efforts by the Federal Reserve to gauge the path for interest rates.

President Donald Trump signaled openness to a potential deal on healthcare subsidies sought by Democrats after another failed Senate vote, hinting at a possible path to breaking the budget deadlock.