Making sense of the forces driving global markets

By Jamie McGeever, Reuters Open Interest Markets Columnist 

U.S. stocks fell on Tuesday, dragged lower by financials after JP Morgan warned that President Donald Trump's proposed cap on credit rates would harm the economy, while geopolitical tensions triggered a sharp rise in oil and lifted gold to new highs.

More of that below. In my column today I look at gold, and why solid central bank demand, coupled with safe-haven buying from investors worried about rising geopolitical tensions, means the only one way for the yellow metal right now looks to be up. 

I’d love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social. 

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* Japan FX, bonds crumbling again

Japanese government bonds and the yen are back under heavy selling pressure after it emerged that prime minister Sanae Takaichi could call a snap election next month to capitalize on her strong public approval ratings since taking office in October.

Long-dated JGB yields hit record highs again, and the yen fell to its lowest against the dollar since July, 2024, bringing the 160.00 mark into view. Markets are on high intervention alert. Stocks rose strongly on Tuesday, but a simultaneous bond and FX market selloff is a dangerous mix.

* Iran's global ripple

Protest and political turmoil in Iran is beginning to ripple strongly across world markets, reflected most notably in the price of oil, energy, and safe-haven gold and precious metals. But with the U.S. mulling strikes on Iran and threatening 25% tariffs on countries doing business with Tehran, all markets are feeling nervy.

Oil jumped 3% on Tuesday, lifting Brent and WTI futures to their highest in nearly three months. Brent crude is up nearly 8% so far this month, on track for its best month since September, 2023. Gold is up 7% to new highs, and $5,000 doesn't seem that far away now.

* U.S. bank report amid Trump controversies

The U.S. fourth quarter earnings season kicked off on Tuesday with Wall Street heavyweights JP Morgan and BNY reporting above-forecast income, but their shares going in opposite directions - JPM -4%, BNY +2%.

Banks' earnings calls are likely to be dominated by President Trump's controversial proposal to cap credit card rates at 10% for a year, and his administration's threat to indict Fed Chair Jerome Powell.

Gold and other precious metals recorded eye-watering price spikes in 2025, so it's difficult to imagine them delivering similar returns in 2026. But solid central bank appetite and safe-haven demand could keep their relentless rise on track.

With the first month of the year barely at the halfway point, gold and silver have already jumped to new records, up 7% and 20%, respectively, so far in 2026. Platinum is up 15% year to date, and is also close to hitting a fresh high. 

These moves are all the more remarkable given that gold, platinum, and silver clocked annual gains of 65%, 125% and 145%, respectively, last year. 

Any notion of investors taking profits - and a breather – evaporated with a blizzard of political, economic, and geopolitical news out of Washington. It brings to mind Vladimir Lenin's apocryphal quote "There are decades where nothing happens; and there are weeks where decades happen." 

Just last week alone, U.S. President Donald Trump ordered the purchase of $200 billion of mortgage-backed securities, directed U.S. oil giants' activities in Venezuela, attempted to ban defense firms' share buybacks and dividend payments, and put a one-year cap on credit card interest rates, while his Department of Justice threatened to indict Fed Chair Jerome Powell.  

This is all fuel for gold. The "dollar debasement trade" may be overstated - the greenback has been remarkably stable for months - but the strength of gold and other precious metals suggests there may be some substance to it. 

This "flight to quality" and inflation-hedging among private investors is complementing central banks' highly inelastic demand for bullion. Reserve managers continue to buy for strategic reasons and diversification, regardless of price.