Gold reversed earlier losses on Wednesday as speculation that Japanese authorities intervened to support the Yen triggered broad US Dollar selling. The Dollar Index slipped 0.11 percent to 99.55 while USD/JPY plunged nearly 1 percent from the 160 threshold.
The precious metal turned positive Wednesday, erasing earlier declines, as a sudden surge in the Japanese Yen forced the Greenback to give back intraday gains and lifted demand for dollar-denominated safe havens.
USD/JPY plunged nearly 1 percent to around 158.80 after flirting with the 160 threshold, the sharpest move since the US and Japan carried out coordinated intervention in late July when the pair climbed to a 40-year high near 164, according to FXStreet data. There has been no official confirmation of intervention or a rate check from Japan's Ministry of Finance.
The Dollar Index slipped 0.11 percent to 99.55 after reaching 99.86 earlier, its highest level since August 14. The move spilled into the broader foreign exchange market, with EUR/USD and GBP/USD bouncing off their intraday lows. Weaker-than-expected US labour data added to the Dollar's downside, with the ADP Employment Change showing private-sector payrolls increased by 38,000 in August, below the 47,000 forecast and July's 46,000 gain.
Gold's safe-haven bid strengthened as the Dollar weakened, with the metal reversing earlier losses that had been driven by elevated Treasury yields and escalating Middle East tensions. The benchmark 10-year yield traded around 4.79 percent after touching 4.81 percent, its highest level since October 2023.
Analysts at MUFG/BTMU cautioned that "a Fed hike this month would pose upside risks to our forecasts for the US Dollar," particularly "if it marks the start of a tightening cycle." Markets price in around a 70 percent probability of a rate hike at the September 15-16 Federal Reserve meeting, up from 36 percent a week ago, following Fed Chair Kevin Warsh's tougher stance on inflation at the Jackson Hole Symposium.
Traders now await Friday's Nonfarm Payrolls report for fresh clues on the US labour market and Fed policy direction. The consensus calls for 58,000 new jobs, following a decline of 23,000 in the prior month. A weaker-than-expected print could extend Dollar losses and sustain gold's safe-haven bid, while a strong number would reinforce hawkish Fed expectations and cap the metal's upside.
This article is for informational purposes only and does not constitute investment advice.
