Yen Slide Sparks Intervention Warning, Gold Breaks Above $4,400View all comments (0)0Japanese officials issue intervention warning as yen stays under pressureGold hits new record, oil surges too as geopolitical tensions escalateStocks attempt a Santa rally but bullish momentum is questionableGeopolitics Threatens to Spoil Festive MoodEscalating tensions in three geopolitical hotspots boosted demand for safe-haven precious metals at the start of the festive week, taking the steam somewhat out of the rebound in equity markets, amid a lacklustre Santa rally this year. The US dollar was on the backfoot, largely thanks to a stronger yen, as Japanese authorities stepped up their warnings against “excessive moves”, while oil and cryptos were also on the up on Monday.Shares on Wall Street just about managed to recoup their weekly losses on Friday, with gains in AI stocks pushing the Nasdaq 100 and S&P 500 higher, although the Dow Jones was the exception as it failed to recover enough to erase its weekly slide. Asian indices had a strong session today, with the weaker yen lifting the Nikkei. But European stocks seem to lack direction despite US futures holding in the green.Optimism and Doubts Cap Gains in EquitiesEquities received a much-needed shot in the arm towards the end of last week, as the soft NFP and CPI reports out of the US bolstered the case for at least two Fed rate cuts in 2026. But there was an added boost for tech and AI-related stocks, as Oracle’s (NYSE:ORCL) shares jumped on news that the US and TikTok parent ByteDance sought to finalize the deal to reduce the Chinese company’s stake in its American subsidiary.Oracle, which has been recently beset by debt worries, will hold a 15% stake in TikTok US, hosting and protecting the social media platform’s US data on its servers.However, doubts about Fed easing and the sustainability of the AI trade persist, potentially limiting any year-end rallies for stock markets.Only yesterday, Cleveland Fed President Beth Hammack signalled a pause in rate cuts, downplaying the surprise drop in the November CPI figures, in comments to the Wall Street Journal.But the more immediate threat to any risk rally is a possible flare-up in geopolitical tensions.Regional Frictions Lift Oil From LowsThe US seized a second sanctioned oil tanker off the coast of Venezuela on Sunday and is reportedly pursuing a third ship, as Washington seems intent on piling yet more pressure on Venezuelan President Nicolas Maduro.With no clear signs of what President Trump’s endgame is in the region, the heightened anxiety is generating fresh safe-haven flows towards popular precious metals.But that’s not the only concern for those hoping for a quiet few days in the run up to Christmas. Peace prospects in Ukraine suffered a blow after Kyiv launched a drone attack on a Russian oil tanker in the Mediterranean, causing another setback for Moscow’s oil revenue stream.Moreover, tensions appear to be brewing again between Israel and Iran. Israeli intelligence have warned the US that a missile drill by Iran could be a cover to carry out strikes on Israel.The latest developments have helped push up oil futures away from last week’s near five-year lows, although there’s no sense of a major panic just yet.WTI oil was last trading just above $57, recovering from the $55 area.Gold and Silver Hit All-Time HighsMeanwhile, gold has skyrocketed above the $4,400 level for the first time, with the longer-term uptrend now completely restored after retracing all of the October pullback. Other precious metals are joining in the rally and even outperforming gold.Palladium is up more than 3%, platinum is approaching its all-time high above $2,000 from 2008, while silver is closing in on the $70 level. Base metals like copper are surging too amid a combination of supply disruptions and a bullish demand outlook.Intervention Warnings Come to Yen’s Rescue, but Only PartlyIn FX markets, there was some relief for the Japanese yen on Monday after strong verbal intervention put a halt to the beleaguered currency’s selloff, at least temporarily. The yen was unable to benefit from the Bank of Japan’s hawkish rate hike on Friday, as investors were disappointed about the lack of clearer signals on the pace and destination of interest rates.The US dollar soared to a one-month high of 157.77 yen on Friday before easing slightly today after both Japan’s top currency official and the chief secretary to the cabinet warned that the government will have to take “appropriate actions” if there continues to be “excessive mores”.However, whilst the dollar eased off against the yen, the euro, pound and aussie maintained their ascent.The increased risk of intervention, especially during the thin liquidity days of this week and next, doesn’t appear to be scaring off the yen bears.Elsewhere, the pound clawed back above $1.34 after UK GDP growth estimates pointed to a modest expansion of 0.1% q/q in the third quarter, easing fears that the economy may have stalled.Yen Slide Sparks Intervention Warning, Gold Breaks Above $4,400View all comments (0)0