Markets have spent the past 24 hours showing increased volatility, more in line with a classic correction than full-blown panic. Investors are heading into the weekend with geopolitics in focus, particularly amid expectations of a potential US escalation toward Iran, prompting some portfolio de-risking.
Precious metals pull back
Gold and silver, which had run up nearly 20% and 30% respectively over the past ten days, gave back some of those gains overnight. Gold fell close to 10%, a sharp drop but one that looks overdue after a period of uninterrupted buying. This doesn’t undermine the longer-term case for precious metals, still supported by central bank purchases and their role as political and fiscal hedges. The move simply reflects concern that prices had run too far, too fast without a meaningful test of momentum.
Equities tread carefully
Equities have shown a similar cautious tone. US stocks ended mixed on Thursday, with the S&P 500 down 0.1%, the Dow up 0.1% and the Nasdaq falling 0.7%.
Tech stocks bore the brunt, Microsoft fell 10% after flagging slower cloud growth alongside heavier AI investment, while Apple rose slightly after a strong quarterly report.
Europe’s STOXX 600 slipped 0.2% and the Euro Stoxx 50 fell 0.7%, dragged down by SAP and Nokia, even as ABB and Roche posted gains.
Investors are weighing earnings results against high valuations, particularly in AI-heavy sectors.
US Fed news and macro headlines
The prospect of former Fed governor Kevin Warsh being nominated as the next US Fed Chair shook sentiment. Warsh, seen as less dovish than some other candidates, resigned previously over disagreement with quantitative easing. Markets reacted cautiously, equities sold off, US Treasury yields rose at the long end, and the US dollar strengthened.
Macro data added to the mix. The US trade deficit widened to $56.8 billion in November, while Japan reported weaker retail sales, a slightly higher unemployment rate, and slower core inflation at 2% in January, supporting a cautious Bank of Japan approach.
Commodities and energy
Crude oil and broader energy markets are heading for consecutive weekly gains, supported by US winter storms and geopolitical fears around Iran. Metals, after a week of record highs, have pulled back, copper fell below $6 per pound from a peak of $6.58, while gold and silver ended the session close to where they began amid thin liquidity. The Bloomberg Commodity Index is up roughly 12% for the month, its strongest monthly gain in more than a decade.
Digital assets remain under pressure
Crypto markets traded in risk-off mode. Bitcoin slid to around $81,000, Ether fell to $2,730, and other altcoins weakened. Outflows from major funds indicate investors are trimming exposure rather than buying dips, reflecting crypto’s sensitivity to rates and macro uncertainty.
Currencies and risk sentiment
The US dollar rallied on Warsh news, with EURUSD testing 1.1900 support and USDJPY pushing above 154. The Australian dollar reversed recent gains, slipping below 0.7000 versus the US dollar, while NOK tracked oil’s ups and downs. Options pricing shows investors paying up for downside protection, signalling caution ahead of month-end macro releases.
Bottom line
The picture across markets suggests a broad correction rather than panic. Prices are adjusting after rapid gains, risk appetite is tempered by geopolitics and central bank moves, and investors are reassessing rather than running for the exits. Volatility remains elevated but orderly, with markets digesting news rather than capitulating.
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