Gold and Silver Hit Record Highs, Then Suffer a Sudden Flash Crash; Crypto Slides to Two-Month Lows

Market Overview

U.S. equities experienced sharp volatility on Wednesday, triggered by renewed concerns over AI-related capital expenditures following Microsoft‘s earnings release. Microsoft shares plunged as much as 12% intraday and closed down 10%, marking the company’s largest single-day decline since 2020. The sell-off erased one of the largest amounts of market capitalization in U.S. stock market history, ranking second all time. The tech-led sell-off dragged the Nasdaq Composite down 0.72%.

However, performance among mega-cap technology stocks was highly divergent. Meta surged more than 10% on the back of strong earnings, while Tesla closed over 3% lower. After the market close on Thursday, Apple rose more than 2% at one point following a solid earnings report, while SanDisk rallied 12% in after-hours trading amid improving storage demand.

On the macro and FX front, the 10-year U.S. Treasury yield edged slightly lower to 4.233%. In contrast, the cryptocurrency market came under heavy pressure. Bitcoin plunged 6% to a two-month low, while Ethereum fell more than 7%, breaking below the key USD 2,800 level.

Commodities experienced extremely volatile, inverted V-shaped price action. Precious metals turned into a roller-coaster ride: spot gold surged in early trading, briefly approaching the historic USD 5,600 level, before a wave of profit-taking triggered a sharp flash crash, with prices retreating nearly 9% from the intraday high. Silver followed a similar path, tumbling more than 12% intraday after setting a record high at USD 121.

Industrial metals and energy showed strength. Copper was a standout performer, jumping more than 11% intraday and still closing up over 6%. Supported by rising geopolitical tensions between the U.S. and Iran, crude oil extended its rally for a third consecutive session, with WTI crude surging 3% and firmly holding above USD 65 per barrel.

Key Themes to Watch

Powells Remarks

Federal Reserve Chair Jerome Powell stated that inflation risks have eased to some extent, while labor market risks appear to be stabilizing. He emphasized that further rate hikes are not the baseline assumption for future policy actions. According to Powell, most of the impact from tariffs has already filtered through the economy, with tariff-driven inflation expected to fade by mid-2026. He declined to comment on the direction of the U.S. dollar. While avoiding direct responses to politically sensitive issues, Powell noted that the legal case involving Fed Governor Lisa Cook could become one of the most significant in the Federal Reserves history. He also suggested that the next Fed chair should remain clearly distanced from electoral politics.

Japans 40-Year Government Bond Auction Sees Strongest Demand in 10 Months

Japans auction of 40-year government bonds on Wednesday recorded a bid-to-cover ratio of 2.76, the highest since March last year. Following the auction results, yields on 40-year JGBs fell by 2 basis points to 3.915%. While the strong demand boosted market confidence in the near term, strategists cautioned that volatility may persist. The demand appears to have been driven more by elevated yield levels and tactical buying rather than a broad-based improvement in long-term investor confidence toward ultra-long-duration bonds.

Key Economic Events

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U.S. December Producer Price Index (YoY / MoM)

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U.S. January Chicago PMI

Overnight

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2028 FOMC voter and St. Louis Fed President Alberto Musalem speaks on the U.S. economy and monetary policy