Gold Hits Records as Dollar Softens, US Banks Watched

Gold surged to fresh record highs as safe-haven demand intensified and the dollar weakened on softer US inflation and concerns over Federal Reserve independence. The greenback struggled broadly, while US equities were cautious despite earlier strength, with attention on large US banks. Outside the US, a sharp slide in the yen and a rally in Japan’s Nikkei reflected expectations of more stimulus ahead of a possible snap election.

Equities

The FTSE 100 ended Tuesday’s session broadly flat, closing marginally lower at 10,137 after setting a record the day before, as gains in energy shares were offset by weakness elsewhere. The more domestically focused FTSE 250 fell more clearly by the close, reflecting a softer tone among UK mid-caps.

Energy stocks provided support to the blue-chip index. BP and Shell both closed higher on Tuesday, rising by around 2%, as oil prices firmed on concerns over supply risks linked to Iran and Venezuela. Mining and precious metals shares also edged higher, helped by gold pushing to a fresh high, with the FTSE precious metals and mining index ending the session up. By contrast, healthcare weighed on the market. Smith & Nephew closed down about 4% after the medical equipment group announced the acquisition of US-based Integrity Orthopaedics in a deal valued at up to $450m, which investors treated cautiously. AstraZeneca also finished lower, down just under 1%, adding to pressure on the wider healthcare sector. Utilities shares fell sharply, closing lower by late afternoon, while Raspberry Pi dropped more than 2% after warning that its 2026 outlook was clouded by volatility in memory supply and pricing. Whitbread stood out on the upside, closing around 7% higher after saying the expected impact from UK business rate rises would be smaller than previously anticipated.

In the United States, Wall Street closed lower late on Tuesday, led by declines in financial stocks. The Dow Jones Industrial Average fell 0.8% by the close, while the S&P 500 slipped 0.2% and the Nasdaq Composite ended 0.1% lower, easing back from record closing highs set on Monday. Financial shares were under particular pressure after renewed focus on President Donald Trump’s proposal to cap credit card interest rates at 10%.

JPMorgan Chase closed down more than 4% on Tuesday despite reporting quarterly profits ahead of expectations. Senior executives, including chief executive Jamie Dimon, warned that a cap on credit card rates would hurt both lenders and consumers, comments that reinforced selling pressure across the sector. Visa fell around 4.5% and Mastercard dropped close to 4%, leaving the financial sector as the weakest performer within the S&P 500 by the end of the session. Other large banks due to report later in the week also closed lower in sympathy.

Outside financials, Delta Air Lines finished the day down more than 2% after issuing a 2026 profit forecast that fell short of analyst expectations. Earlier in the session, US inflation data for December came in broadly in line with forecasts, which helped limit losses across the wider market but did little to halt the slide in banking and payments stocks by the close.

Forex & Commodities

Currency markets were led by renewed weakness in the Japanese yen, which fell to its lowest level since mid-2024 amid speculation that Prime Minister Sanae Takaichi may call a snap general election on 8 February. The yen briefly slipped to around 159.5 per dollar before stabilising near 159.2, as investors reacted to signs of softer demand at a five-year Japanese government bond auction and concerns that an election could usher in looser fiscal policy. With the exchange rate edging closer to 160, traders remained alert to the possibility of official intervention.

The US dollar was steadier, holding near a one-month high against a basket of major currencies, supported by inflation data released late on Tuesday that broadly matched expectations and reinforced the view that the Federal Reserve is likely to keep interest rates unchanged at its next meeting. Public backing for Fed chair Jerome Powell from central bankers and senior Wall Street executives helped temper market unease following pressure from the White House. Sterling moved modestly higher against the dollar, trading near 1.344, while the euro hovered around 1.164 in subdued European trading.

Spot gold rose early this morning to a fresh record of about $4,639 per ounce, extending gains seen since the start of the year as investors responded to contained US inflation readings and lingering geopolitical tensions. Silver climbed through $90 an ounce for the first time, pushing further into record territory, while platinum and palladium also moved higher.

Oil prices paused after four consecutive sessions of gains. Brent crude slipped to roughly $65.09 a barrel in Asian trading, while US crude eased to around $60.77, weighed down by reports of rising US inventories and the resumption of Venezuelan exports following a reversal of US sanctions. At the same time, unrest in Iran continued to underpin prices, with analysts noting that political risks rather than immediate supply losses were driving sentiment.