Gold Hits New High, Powell Speech in Focus, AI Optimism Sparks Asia Rally

The EUR/USD extended its decline for a third consecutive session on Thursday, slipping 0.20% as weak German data and ongoing French political uncertainty pressured the euro.

The euro’s recent slide has been fueled by mounting political tension in France and disappointing economic data out of Germany. Outgoing French Prime Minister Sébastien Lecornu said progress has been made in talks with parliamentary groups and that President Emmanuel Macron could appoint a new government within 48 hours.

Meanwhile, Germany’s industrial production data dropped 4.3% month-on-month, heightening fears of a possible recession in Europe’s largest economy and adding further pressure to the single currency.

On the US side, the Federal Reserve’s latest meeting minutes revealed that officials remain cautious on inflation despite signaling more rate cuts ahead this year. The minutes noted that “most participants observed it was appropriate to move the target range for the federal funds rate toward a more neutral setting,” citing growing downside risks to employment.

Fed officials appear divided, with nine policymakers supporting two additional cuts this year, while others favor one or none. The minutes underscored concerns about balancing inflation risks against the need to safeguard the labor market.

Gold prices surged past the $4,000 per ounce mark for the first time on Wednesday, extending a record-breaking rally driven by mounting geopolitical tensions, global economic uncertainty, and growing expectations of U.S. interest rate cuts.

Gold, traditionally viewed as a store of value during periods of instability, has soared 54% year-to-date following a 27% gain in 2024—making it one of 2025’s top-performing assets, outperforming global equities, Bitcoin, and the U.S. dollar.

The rally in precious metals has been supported by expectations that the Federal Reserve will begin cutting rates soon. Markets are currently pricing in a 25-basis-point reduction at the upcoming October Fed meeting, with another cut likely in December.

Adding to the uncertainty, the U.S. government shutdown entered its eighth day on Wednesday, delaying key data releases and pushing investors toward non-government sources for economic insights.

Escalating geopolitical tensions—from the Middle East conflict to the war in Ukraine, as well as political turmoil in France and Japan—have further boosted safe-haven demand.

Oil prices edged lower before the end of the session on Wednesday pressured by signs of easing geopolitical risk after U.S. President Donald Trump announced that Israel and Hamas had agreed to the first phase of a Gaza ceasefire deal. A second consecutive weekly rise in U.S. crude inventories further weighed on prices.

Earlier in the week, oil prices found temporary support from OPEC+’s modest production restraint, but that lift faded as U.S. stock builds and easing geopolitical tensions took center stage.

President Donald Trump announced late Wednesday that Israel and Hamas had agreed to the first stage of a U.S.-brokered Gaza peace plan, which includes a temporary halt in hostilities, the release of hostages, and phased Israeli troop withdrawals.

Israeli Prime Minister Benjamin Netanyahu said he would convene his government on Thursday to approve the ceasefire proposal, which aims to secure the return of all remaining hostages.

Adding further pressure, data from the U.S. Energy Information Administration (EIA) showed that crude stockpiles increased by 3.7 million barrels for the week ending October 3, exceeding analyst forecasts of a 2.25 million-barrel build.

While gasoline and distillate inventories declined more than expected — signaling firm end-user demand — the crude build highlighted ongoing surplus risks in the U.S. market.

The EIA also reported that implied demand rose to 21.99 million barrels per day, the highest level since December 2022, helping limit losses for the session.

The US Tech 100 ended the session to a new all time high propelled by a rebound in major technology stocks after Nvidia CEO Jensen Huang boosted optimism about artificial intelligence–driven chip demand. Investor sentiment was further lifted by the Federal Reserve’s latest meeting minutes, which pointed to additional rate cuts later this year.

Minutes from the Federal Open Market Committee’s (FOMC) September 16–17 meeting revealed that most policymakers viewed further rate cuts as appropriate, citing signs of a softening labor market. However, there was no clear consensus on how deep future reductions should be, given persistent inflation risks.

Nvidia shares climbed after CEO Jensen Huang said in a CNBC interview that demand for computing power has “gone up substantially” over the past six months, underscoring sustained AI momentum.

Huang also expressed enthusiasm about investing further in Elon Musk’s AI startup, xAI, following reports from Bloomberg News that Nvidia’s chips could help boost xAI’s current funding round to $20 billion.

The comments sparked fresh enthusiasm for the semiconductor sector, which had faced recent profit-taking amid valuation concerns.

With the U.S. government shutdown still in effect, the release of key economic data remains on hold, forcing traders to rely on private-sector metrics to gauge the economy’s strength.