Gold Surges as Dovish Fed Propels Asia; US Equities Mixed on Earnings/Tensions

The EUR/USD pair rose on Wednesday ending the session 0.37% higher as investors priced in further Federal Reserve rate cuts amid rising stagflation concerns and renewed trade tensions between the United States and China.

While US President Donald Trump refrained from implementing a threatened 100% tariff on Chinese goods, both nations introduced reciprocal port fees, escalating the ongoing trade conflict. The move follows Beijing’s new export controls on rare earths, which are critical for US manufacturing sectors.

Trump struck a more conciliatory tone, stating that the US “does not want to hurt China,” but the exchange of tariffs and port fees underscores the fragile nature of ongoing trade discussions.

On the data front, the Federal Reserve’s Beige Book painted a mixed economic picture, suggesting that the US economy is flirting with stagflation. The report indicated stable employment levels but subdued labor demand across most districts and sectors.

US Treasury Secretary Scott Bessent hinted at a potential compromise with Beijing, suggesting that Washington could pause some tariffs in exchange for looser restrictions on rare earth exports.

In Europe, inflation data presented a mixed picture. France’s CPI remained below the European Central Bank’s (ECB) 2% target, while Spain’s inflation rose to 3% in September, exceeding expectations. Despite the divergence, ECB policymakers reiterated their cautious approach.

Gold prices surged to an all-time high on Wednesday, breaching the $4,200 per ounce mark for the first time in history as growing expectations of U.S. rate cuts and renewed geopolitical tensions drove investors toward the safe-haven metal.

Gold has soared more than 60% so far this year, underpinned by a mix of geopolitical uncertainty, aggressive central bank buying, de-dollarization trends, and robust ETF inflows.

Markets are now pricing in a 25-basis-point Fed rate cut in October with a 98% probability, followed by a fully priced-in cut in December, according to futures data.

Gold — a non-yielding asset — typically benefits from lower interest rates, which reduce the opportunity cost of holding the metal. It is also viewed as a traditional hedge against inflation and economic uncertainty.

Adding to gold’s appeal, U.S.-China tensions escalated this week after both nations imposed reciprocal port fees despite President Donald Trump’s recent softer rhetoric. Trump said Washington was even considering cutting some trade ties with Beijing amid ongoing frictions.

Markets are also monitoring the U.S. government shutdown, which has halted official data releases, potentially clouding the Fed’s policy outlook in the coming months.

With the Fed leaning dovish, the dollar under pressure, and geopolitical risks mounting, the gold rally shows little sign of slowing.

Oil prices are trading slighlt higher early on Thursday, lifted by expectations of tighter global supplies after U.S. President Donald Trump said India had agreed to stop buying oil from Russia.

The comments offered much-needed support to crude markets, which had been weighed down earlier in the week by renewed U.S.-China trade tensions and mounting concerns about a potential supply glut.

Speaking to reporters on Wednesday, President Trump said he was “assured” by Indian Prime Minister Narendra Modi that India would soon wind down its imports of Russian crude. While New Delhi has yet to confirm the move, such a shift would mark a major change in global oil trade dynamics, as India—along with China—is one of the largest importers of Russian oil.

Despite Thursday’s uptick, crude remains under pressure after a sharp sell-off earlier in the week. Traders have been rattled by escalating trade tensions between Washington and Beijing, with Trump threatening 100% tariffs on Chinese imports in response to China’s rare earth export controls.

Market attention will now turn to upcoming U.S. inventory data for further insight into demand trends in the world’s largest oil consumer—particularly as the ongoing government shutdown delays key economic releases.

With geopolitical risks, trade tensions, and central bank policy all in focus, oil prices could remain volatile in the near term.

The US 500 closed higher on Wednesday, buoyed by a wave of upbeat quarterly earnings and renewed expectations that the Federal Reserve will deliver its second rate cut of the year later this month.

A string of better-than-expected bank earnings helped lift market sentiment, reinforcing optimism about corporate resilience despite macroeconomic headwinds.

Bank of America raised the lower end of its interest income forecast and topped profit expectations as its investment banking unit benefited from a strong rebound in dealmaking. Morgan Stanley also beat estimates, reporting higher third-quarter profit driven by a surge in merger and acquisitions activity. Meanwhile, Goldman Sachs posted solid earnings, boosted by robust investment banking fees, while JPMorgan Chase lifted its full-year net interest income outlook following another strong quarter. Wells Fargo reported better-than-expected results as higher deal flow and improved credit performance supported earnings.

Federal Reserve Governor Stephen Miran on Wednesday called for swift interest rate cuts, warning that escalating U.S.-China trade tensions posed new risks to the economic outlook.

His comments came just a day after Fed Chair Jerome Powell signaled that the central bank remains on track to cut rates again later this year, following its 25-basis-point reduction in September.

With corporate earnings showing resilience and the Federal Reserve leaning dovish, equity markets appear supported in the near term. However, the geopolitical tensions and slowing global trade could limit gains if the U.S.-China conflict continues to intensify.