Geopolitical tensions caused US stock futures to edge lower, the dollar to rise, gold to approach a historic high, and silver to reach a new record.

Geopolitical tensions caused US stock futures to edge lower, the dollar to rise, gold to approach a historic high, and silver to reach a new record.

On Wednesday (December 17), Asia-Pacific stock markets mostly fell, and U.S. stock index futures edged lower as escalating geopolitical tensions prompted a rush of funds into commodities like gold and silver. Silver hit a new record high, while gold neared the historical high set in October. International oil prices rebounded sharply, with both WTI and Brent crude up more than 1%. The U.S. dollar index continued its rally, rising over 0.2% intraday.

According to a previous WallstreetCN article, Trump ordered a comprehensive blockade of sanctioned oil tankers entering and leaving Venezuela. Both U.S. WTI and Brent crude rose 1.5% intraday, as the market worried that the move would further tighten supply.

Meanwhile, escalating geopolitical tensions triggered increased demand for safe-haven assets, pushing precious metals higher across the board. Spot silver climbed above a historic high of $66 per ounce; gold rebounded above $4,330—just a step away from its all-time high set in October. Platinum rose for a fifth consecutive trading day, reaching its highest level since 2011.

Although the latest U.S. employment data showed cooling in the labor market, there were no signs of a sharp deterioration, leading traders to scale back bets on imminent Fed rate cuts. As a result, the U.S. dollar rose against all G-10 currencies, while U.S. Treasury yields edged higher. Market focus has now shifted to upcoming inflation data for more definitive policy clues.

ANZ Group Holdings Ltd. analysts Brian Martin and Daniel Hynes warned that, considering the impact of previous government shutdowns, these soft labor reports should be interpreted cautiously. Uncertainty about the Federal Open Market Committee’s (FOMC) next move may not dissipate until data flow normalizes next year.

Core Market Movements:

S&P 500 futures up 0.1%, Nasdaq 100 futures up 0.1%,;

Nikkei TOPIX down 0.2%; Australia S&P/ASX 200 down 0.2%;

U.S. dollar index up 0.2%; Euro/USD down 0.1% to $1.1730; Yen/USD down 0.2% to 155.09

10-year U.S. Treasury yield up 3 basis points to 4.17%; Japan 10-year yield up 2.5 bps to 1.980%;

Australia 10-year yield up 2 bps to 4.75%

WTI crude futures up 1.45% to $55.93/barrel; Brent up 1.44% to $59.77/barrel;

Spot gold up 0.77% to $4,335.77/oz; Spot silver up 3.72% to $66.13/oz;

Bitcoin down 1.2% to $86,679.95; Ethereum down 0.5% to $2,935.74

Safe-Haven Demand Pushes Precious Metals to New Records

Today, the precious metals market stood out, with gold currently rebounding above $4,330 per ounce—ending a brief pullback from the previous session and now just a step away from the record high of $4,381 set in October.

(Spot gold 4H chart)

Since the start of the year, gold prices have surged by about two-thirds and are set for the best annual performance since 1979. This spectacular rally is mainly driven by massive central bank buying, investors pulling out of government bonds and major currencies, and heightened geopolitical tensions.

Silver and platinum have also recorded significant gains. Silver broke past $66 again, reaching as high as $66.52/oz for a new record, while platinum touched multi-year highs. Analysts note that the broad rally in precious metals shows capital is rapidly flowing into hard assets to hedge against risks of potential escalation in geopolitical conflict.

The oil market rebound was mainly driven by the latest geopolitical moves from the Trump administration. On Tuesday, Trump ordered a “comprehensive and thorough” blockade of all sanctioned oil tankers to and from Venezuela, and declared the country’s rulers as foreign terrorist organizations.

According to a U.S. oil trader’s estimate, the U.S. blockade could affect the transport of 400,000–500,000 barrels of oil per day, pushing oil prices up by $1–2 per barrel. This escalation has notably shifted short-term market sentiment.

However, analysts remain cautious about the long-term outlook. LSEG senior oil analyst Emril Jamil pointed out that unless a retaliatory move disrupts a wider energy system in the Americas, there is unlikely to be an extreme price spike in the short-term, with trading focus still on global oversupply expectations.

Latest Nonfarm Jobs Data Dampen Rate-Cut Expectations

Compared to the hot commodities market, the latest U.S. economic data is more mixed. According to WallstreetCN article, in November, U.S. nonfarm payrolls increased by 64,000, and the unemployment rate rose from 4.4% in September to 4.6%—the highest since 2021. However, given that October’s data dropped by 105,000 due to federal hiring cuts, most in the market view the numbers as weak, but not disastrous.

Evercore ISI economist Krishna Guha noted that the Fed may view this jobs report as “glass half full” rather than “glass half empty”—the data is not weak enough to trigger another rate cut soon. Current market pricing shows about a 20% chance of a Fed rate cut in January.

As jobs data dampened Fed rate-cut expectations, the dollar index remained strong, with the biggest gains against the yen, and 10-year Treasury yields climbing to 4.17%.

(Dollar Index 4H chart)

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