The Japanese yen rose in Asian trading on Wednesday against a basket of major and minor currencies, attempting to recover from a one-week low against the US dollar and heading toward its first gain in four sessions, as safe-haven demand for the yen rebounded amid sharp market volatility following gold’s massive losses.

Investors continue to assess the new Japanese government led by Sanae Takaichi, who officially became the country’s first female prime minister after a decisive parliamentary vote on Tuesday.

Price Overview

• Today’s yen exchange rate: The dollar fell about 0.3% to ¥151.49, down from the opening level of ¥151.93, after touching a high of ¥151.96.

• On Tuesday, the yen ended down 0.8% against the dollar, its third straight daily loss, hitting a one-week low at ¥152.17 following the parliamentary vote to elect Japan’s new prime minister.

Sharp Market Volatility

The sharp drop in gold prices triggered broad volatility across global markets, as investors rebalanced their positions among safe-haven assets, led by a notable rebound in demand for the Japanese yen as a defensive hedge during uncertain times.

Gold fell 2.9% on Wednesday, extending steep losses for a second consecutive day to reach $4,003.39 per ounce amid a broad decline in precious metals.

The metal had already lost more than 5% on Tuesday — its biggest one-day drop since 2020 — as rapid profit-taking followed an extended rally that had repeatedly pushed gold to record highs.

Sanae Takaichi

In a historic first, Japan on Tuesday turned a new page in its political history as Sanae Takaichi was elected prime minister, becoming the first woman ever to hold the nation’s highest office.

Takaichi won the position after a decisive parliamentary vote. According to NHK, she secured 237 votes in the first round, eliminating the need for a runoff in the 465-seat lower house.

Her victory came after the ruling Liberal Democratic Party (LDP) formed a coalition with the Japan Innovation Party. Reports indicate the two sides signed an agreement over the weekend to establish a coalition government.

According to Reuters, Takaichi agreed to support several Japan Innovation Party policies, including reducing the number of parliamentary seats, offering free secondary education, and freezing the food consumption tax for two years.

Earlier this month, Takaichi faced a major political setback after the LDP’s abrupt split from its long-time coalition partner, the Komeito Party, which had been allied with it for more than 26 years.

A close political ally of the late Shinzo Abe, Takaichi is known for her support of the stimulus policies that defined “Abenomics,” raising expectations she will pursue an expansionary economic approach that could benefit Japan’s stock market but keep the yen under pressure due to continued monetary easing.

After winning leadership of the ruling party, Takaichi pledged to strengthen Japan’s economy through aggressive spending and criticized the Bank of Japan’s recent interest-rate hike.

Japanese Interest Rates

• Bank of Japan Governor Kazuo Ueda said last week that the central bank remains prepared to raise its key interest rate if prospects for growth and inflation improve.

• Following Ueda’s remarks, market pricing for a quarter-point rate hike at the October meeting rose from 25% to 35%.

• Yen swap markets now imply a 50% chance of a rate hike by December, up from 41% before Ueda’s comments.

• Investors are awaiting further data on inflation, unemployment, and wage growth in Japan to reassess these expectations.

Gold prices fell sharply on Tuesday after hitting record highs the previous day, as investors rushed to take profits, triggering a sudden and steep sell-off that surprised many who had expected the precious metal’s rally to continue.

Gold recorded its worst single-day decline since 2013, dropping about 6.3% in one session — one of the largest daily moves in the precious metals market over the past decade. Spot gold fell from a record high of around $4,381 per ounce to an intraday low of $4,082.

The sharp decline resulted from a combination of factors, including profit-taking after a prolonged rally, easing geopolitical tensions — particularly in US-China trade relations — a stronger US dollar, and technical indicators signaling overbought conditions.

Silver drops 7.5% as investors exit safe-haven assets

Silver prices also plunged on Tuesday, falling around 7.5% to a low near $47.12 per ounce, marking one of the biggest single-day declines in recent years and tracking gold’s historic sell-off.

The fall in silver reflected investors’ exit from both safe-haven and industrial metals as the stronger US dollar made dollar-denominated commodities more expensive for holders of other currencies.

Positive developments in US-China trade talks — including the upcoming meeting between Presidents Donald Trump and Xi Jinping — further reduced demand for precious metals as safe-haven assets. In addition, technical indicators triggered sell signals after silver reached overextended price levels, prompting a wave of profit-taking.

Despite the short-term correction, the fundamental outlook for silver remains strong, supported by growing industrial demand in areas such as solar energy, electric vehicles, and artificial intelligence, as well as steady central bank purchases and ETF inflows that continue to support prices over the medium and long term.

Strong US dollar adds pressure to metals

The US dollar has strengthened notably in recent days, with the Dollar Index (DXY) reaching around 98.91 on October 21, 2025 — its highest level in about a week and up 0.33% from the previous session.

The dollar’s rise was driven by optimism over a resolution to the US government shutdown and improving expectations for a fair trade deal between Presidents Trump and Xi, which boosted confidence in the US economy.

The greenback is also supported by expectations that the Federal Reserve will cut interest rates soon. Investors anticipate a 25-basis-point reduction next week, with potential for further cuts thereafter.

Although the dollar has gained about 1.6% over the past month, it remains down roughly 5% year-to-date. A stronger dollar raises the cost of dollar-priced assets such as gold and silver for foreign investors, adding selling pressure to commodity markets.

Profit-taking and shifting geopolitical sentiment behind the sell-off

Many analysts believe today’s sharp drop in gold prices is primarily due to profit-taking after the metal reached record highs. Investors who bought earlier in the year chose to lock in gains rather than risk exposure to a potential correction.

Easing geopolitical tensions and improving international trade relations also contributed to a shift in sentiment toward riskier assets such as equities, reducing demand for gold as a safe haven.

Gold market outlook and next moves

Traders and short-term speculators are closely watching upcoming economic data, especially inflation figures and Federal Reserve policy updates, which will shape gold’s direction in the coming weeks.

Despite current volatility, analysts maintain that gold remains an attractive long-term investment, recommending that investors view price dips as strategic buying opportunities rather than panic-selling during temporary corrections.

Experts emphasize that recent moves highlight the importance of portfolio diversification: while gold offers protection against inflation and uncertainty, balanced portfolios with a mix of asset classes provide more effective risk management.

Many investors see the current decline as a potential buying opportunity, as historical patterns suggest gold often rebounds strongly after steep corrections, particularly amid ongoing global economic uncertainty.

Looking ahead, gold prices are expected to remain volatile, influenced by investor sentiment, dollar strength, geopolitical developments, and central bank decisions. Market experts advise close monitoring and prudent risk management in the period ahead.

European nations, in cooperation with Ukraine, are working on a 12-point proposal to end the war with Russia along the current front lines, countering renewed demands from Russian President Vladimir Putin that Kyiv surrender part of its territory in exchange for a peace deal.

The proposed plan calls for the return of all deported Ukrainian children and the implementation of a prisoner exchange, while Kyiv would, in return, receive security guarantees, funding to repair war damage, and a fast-track path to European Union membership.

The plan also includes a gradual lifting of sanctions on Russia, though roughly $300 billion in frozen Russian central bank reserves would not be returned to Moscow until it agrees to contribute to Ukraine’s postwar reconstruction.

Copper prices fell on Tuesday as the US dollar strengthened against most major currencies, reversing the previous day’s gains that were supported by expectations of stronger demand growth.

Consumption in the United States and India is expected to emerge as the main drivers of global copper demand over the next decade, after decades of Chinese dominance in the market — a dominance that is now slowing as China’s growth in copper demand loses momentum.

China’s industrial boom and large-scale infrastructure expansion fueled a historic rally that pushed copper prices above $10,000 per metric ton, compared to around $1,500 twenty-five years ago.

While China will remain the world’s largest copper market through the next decade and beyond, analysts expect new regional and geopolitical dynamics to play a greater role in shaping demand and prices worldwide.

Analysts note that shifts in regional policies, infrastructure investment cycles, and global political realignments will force producers, consumers, traders, and investors to adapt to a market now driven by multiple forces rather than a single dominant player.

Tom Price, an analyst at Panmure Liberum, said, “China’s pace of copper consumption and stockpiling will slow, and we’ll return to traditional demand drivers, primarily replacement and renewal cycles outside of China.”

He added that the full impact of these shifts has yet to materialize, but efforts by the United States and other nations to encourage domestic manufacturing will likely slow China’s export-oriented industrial activity, thereby reducing its refined copper demand — estimated at around 15 million tons this year.

In contrast, the expansion of data centers to support artificial intelligence technologies and the modernization of power grids are expected to drive copper demand growth outside of China, becoming the main catalysts for price increases.

Price explained that “China has already built out most of its infrastructure, including its power grid, so its activity will gradually decline in line with its needs,” predicting that Chinese copper demand in 2031 will be about 6% lower than in 2026.

He also projected that China’s share of global primary copper consumption will drop to 52%, or roughly 27 million tons in 2031, compared with 57% in 2026.

Meanwhile, US demand is expected to reach 2.2 million tons in 2031, up nearly 50% from 2026, while India’s consumption is expected to exceed 1 million tons, a rise of more than 30%.

Growing Western Resistance

Analysts also expect the new 50% US tariff on copper tubes and wires — imposed by President Donald Trump — to stimulate domestic production.

For China, however, these measures could mean losing one of its key export markets for copper products. According to Trade Data Monitor, the United States is China’s fourth-largest market for copper tube exports.

Washington imported 14.4 million tons of copper tubes from China last year, and shipments reached 8 million tons in the first seven months of this year — highlighting the potential market loss for Beijing.

Duncan Hobbs, Research Director at Concord Resources, said, “China’s output of manufactured goods, particularly those destined for export, is likely to slow due to increasing resistance from Western economies.”

These exports include copper wires used in power grids. A decade ago, the US Department of Energy found that 70% of the country’s transmission lines were over 25 years old.

Meanwhile, India is expanding its electricity network to support its goal of achieving 500 gigawatts of non-fossil-fuel-based energy by 2030.

Across Asia (excluding China), consultancy Benchmark Mineral Intelligence (BMI) expects copper demand to rise by 25% to more than 9.2 million tons between 2025 and 2030.

For the power infrastructure segment — including electrical grids, data centers, and telecommunications — BMI forecasts a 35% increase in demand to 2.2 million tons, while Chinese companies are projected to see more modest growth of 4% and 11%, respectively.

Infrastructure Renewal in the West

Efforts to modernize electricity grids in Western nations are focused mainly on upgrading existing systems — a gradual and less copper-intensive process compared to building new networks from scratch, as China did.

Robert Edwards, Principal Analyst at metals consultancy CRU, said he had long expected China’s dominance in the copper market to fade, but massive Chinese investments in electric vehicles, renewable energy, and power networks have delayed that shift.

CRU now forecasts that China’s share of total global consumption of mined and recycled copper will decline to 57% of 31.36 million tons in 2030, down from 59% of 27.62 million tons this year.

“China’s demand growth potential is now limited,” Edwards concluded, “and we should expect more of the expansion to come from the rest of the world.”

As of 16:57 GMT, the US Dollar Index rose 0.3% to 98.8, hitting a high of 98.9 and a low of 98.5.

In US trading, December copper futures fell 1.4% to $4.96 per pound at 16:39 GMT.