Gold rebounds to market uncertainty, U.S. Dollar pullback

Cautious markets prevail

Market sentiment is fragile and slightly negative despite the U.S. ending a partial government shutdown. Caution is driven by U.S.–Iran tensions, concerns over Federal Reserve independence, the cancellation of Friday‘s U.S. jobs report, and uncertainty ahead of today’s ISM Services PMI and ADP data.

President Donald Trump signed a $1.2 trillion budget funding most agencies through September, though DHS funding expires next week, keeping political risk in focus. Speculation around Kevin Warsh replacing Jerome Powell as Fed Chair failed to lift confidence, as Senate opposition threatens to block nominations. Fed signals were mixed, with some officials highlighting sticky inflation while others see scope for rate cuts this year.

In markets, the U.S. dollar remains defensive while gold jumps over 2%. The Australian dollar stays firm after an RBA rate hike and strong services data. The yen failed to benefit from safe-haven demand, while China and Japan services data showed continued expansion. New Zealand data was mixed, with rising commodity prices but unemployment at a decade high. Asia-Pacific equities edged lower, cryptocurrencies stayed pressured, and USDJPY, AUDUSD, and USDCAD held firm while NZDUSD lagged.

EURUSD and GBPUSD rebound, but USDJPY rises further

The U.S. Dollar‘s retreat joined the market’s cautious optimism to underpin mild recoveries in the EURUSD and the GBPUSD prices. However, USDJPY failed to justify strong Japan Services PMI data, increasing the odds of the BoJ rate hike, by rising for the fourth consecutive day to hit a 10-day high.

Gold and Silver regain upside momentum

After posting notable declines in recent days, gold and silver prices rebounded in the previous session and extended gains early Wednesday. The recovery is supported by the U.S. Dollar‘s pullback and market uncertainty over the U.S. government shutdown, Federal Reserve independence, and U.S.-Iran tensions. The cancellation of key U.S. data, along with caution ahead of the U.S. ISM Services Purchasing Managers’ Index (PMI), ADP Employment Change, and preliminary University of Michigan (UoM) Consumer Sentiment for February, also adds to mixed market moves and supports the precious metals.

Crude Oil fades recovery, cryptocurrencies dribble, and equities drift lower

Energy markets remained tense as fears of a U.S.-Iran conflict resurfaced. Oil prices were already weak before the drone headlines, with markets reacting as if a major escalation had been narrowly avoided, even though negotiations are still planned for Friday. Oil prices also responded to a private survey showing a large crude oil inventory draw against expectations for a build, but WTI crude oil failed to extend the previous days gains early Wednesday amid a mixed market mood.

On Wall Street, selling pressured technology stocks, megacap names, and Nvidia, while more than half of the S&P 500 ended higher, indicating losses were concentrated in earlier artificial intelligence leaders. Advanced Micro Devices reported strong fourth-quarter results, with earnings per share of $1.53 and revenue of $10.27 billion, beating estimates, but a weaker outlook pushed the stock lower after hours. NVIDIA and OpenAI also moved to ease recent negative headlines.

Bitcoin (BTC) dropped to $72,903, its lowest level since Donald Trumps re-election, before rebounding about $3,000 later in the session, easing immediate risk concerns. However, broader fears across the cryptocurrency market continue to weigh on both Bitcoin and Ethereum (ETH).

Latest moves of key assets

• WTI crude oil struggles to extend the previous days recovery to around $63.80.

• Gold extends recovery from a months low to $5,090 as we write.

• The US Dollar Index (DXY) remains under pressure near 97.30, keeping the previous day‘s retreat from a week’s high.

• Wall Street closed with mild losses, and the Asia-Pacific stocks edged lower. That said, equities in Europe and the UK traded mildly negative during the initial hour.

• Bitcoin (BTC) and Ethereum (ETH) are both up around 1.0%, bouncing off multi-week lows hit the previous day, as bears take a breather near $76,200 and $2,270, respectively.

A busy day ahead…

Looking ahead, Wednesday‘s economic calendar features Eurozone Inflation, U.S. ADP Employment Change, and the ISM Services Purchasing Managers’ Index (PMI). Markets will also closely watch the growing risk to the U.S. government reopening due to concerns around ICE actions, along with updates on U.S.-Iran tensions and Donald Trumps trade tariff announcements.

Predictions for top-tier assets

• Bullish Move Expected: USDCAD, USDJPY, Gold, Silver

• Further Downside Likely: USDCHF, BTCUSD, ETHUSD

• Sideways Movement Anticipated: Nasdaq, DJI30, USDCNH, AUDUSD, NZDUSD, US Dollar

• Slow & Gradual Fall Eyed: DAX, FTSE 100, EURUSD, Crude Oil, GBPUSD

May the trading luck be with you!