The dollar index rose to a 3-week high, boosted by geopolitical risks in Venezuela. The US Dec ISM manufacturing index unexpectedly fell, signaling contraction. Philadelphia Fed President mentioned possible rate adjustments later this year. Markets predict a 16% chance of a rate cut at the next FOMC meeting. The dollar faces underlying weakness amid expectations of rate cuts and concerns over Fed Chair appointment.

EUR/USD dropped to a 3-week low due to the dollar’s strength and lower German bund yields. Swaps indicate a 1% chance of a rate hike by the ECB. USD/JPY is down, with the yen rebounding on BOJ Governor’s hawkish comments. The yen initially fell amid Japanese fiscal concerns. Gold and silver prices surged on geopolitical risks in Venezuela and dovish Fed comments.

Precious metals remain supported by safe-haven demand amid geopolitical uncertainties and liquidity injection. Central bank demand for gold is strong, with China’s PBOC and global central banks increasing reserves. Fund demand for precious metals is high, with long holdings in ETFs at multi-year highs. The article was published for informational purposes only.

Read more at Yahoo Finance: Dollar Rallies and Precious Metals Surge on Geopolitical Risks