Jakarta, October 22, 2025
The Japanese yen weakened against the US dollar on Tuesday after a massive selloff in the gold market triggered a surge in cross-asset volatility. Gold prices plunged more than 5% to around US$4,000 per ounce, marking the steepest one-day drop since 2013. The sharp correction followed a spectacular rally in recent weeks, prompting many investors to lock in profits.
The sudden plunge rattled global markets, prompting capital outflows from precious metals toward safer assets such as the yen — long considered a defensive currency during periods of heightened risk aversion.
Meanwhile, the US Dollar Index (DXY) edged slightly lower to around 98.88, snapping a three-day winning streak as investors began adjusting positions ahead of next week’s Federal Reserve policy decision. A Reuters survey showed that most economists expect a 25-basis-point rate cut at the upcoming October 29 meeting, amid signs of slowing growth and easing inflation pressures.
The sharp moves in the precious metals market also spilled over into global equities. Asian stock indexes traded mixed, while US Treasury yields slipped slightly as demand for safe-haven assets increased.
“The sudden drop in gold is a reminder that parabolic rallies rarely end gently,” said a Tokyo-based market analyst. “Investors are reassessing their exposure to risk assets, and the yen may once again become a preferred defensive play.”
With expectations for lower US interest rates and ongoing fiscal uncertainty in Japan, global financial markets appear to be entering a new phase of adjustment. The yen is likely to remain highly volatile, while the extreme swings in gold could serve as the next catalyst for global capital flows.
Ade Yunus
Global Market Strategies