Post-Christmas Market Frenzy: Renminbi Appreciates to New Highs, Gold and Silver Surge to Historic Records

The Christmas holiday has come to an end, and global markets are entering a period of active post-holiday trading. Although major markets in the US, Hong Kong, and Europe are experiencing decreased trading activity due to holiday closures, the Asia-Pacific markets have already issued early warnings—the RMB is surging aggressively, and commodities have set astonishing records.

RMB Breaks Psychological Barrier, Central Bank Stance Is Key

On Thursday, December 25, offshore RMB against the US dollar broke through the 7.0 psychological level, reaching a high of 6.9960 intraday, the first time since September 2024 to break this mental barrier. Onshore RMB also showed strength, falling to 7.0051, hitting a new low since May 2023.

Market participants are generally optimistic about the continued appreciation. Year-end demand for foreign exchange settlement is strong, and the external US dollar index (dxy) lacks rebound momentum. Under the combined pressure of these forces, the RMB’s appreciation has accelerated. A trader from a Chinese bank revealed that the market has a large foreign exchange settlement position, and the US dollar index (dxy) is generally weak, with market expectations favoring RMB appreciation already quite consensus.

However, whether the appreciation can continue depends on the stance of the central bank. Goldman Sachs’ latest report reveals an interesting signal—the People’s Bank of China (PBOC) has alternated between emphasizing “resilience” and “flexibility” over the past few months. This pattern suggests that the PBOC leans toward a stronger RMB exchange rate but also aims to avoid the shocks of rapid appreciation.

Goldman Sachs economist Xinquan Chen pointed out that when the central bank emphasized “enhancing exchange rate resilience” in September, the RMB against the dollar experienced rapid appreciation from August to September; by November, as the exchange rate stabilized around 7.10, the PBOC shifted to emphasizing “maintaining exchange rate flexibility,” implying tolerance for further appreciation; now entering Q4, the PBOC is emphasizing resilience again, reflecting its desire to slow the pace of appreciation. Goldman Sachs forecasts that in 3, 6, and 12 months, the RMB will appreciate to 6.95, 6.90, and 6.85 respectively.

Commodities Hit New Highs, Gold and Silver Rise Together

Alongside the RMB appreciation, gold and silver have performed astonishingly, becoming market focal points. On Friday, December 26, gold briefly broke through the $4,500 mark, reaching $4,504; silver surged to $73.67, both hitting record highs.

The driving force behind this rally is the expectation of falling US bond yields. Bank of America expects the Federal Reserve to cut interest rates once in June and July next year, with the 10-year US Treasury yield falling back to the 4%–4.25% range by year-end, with potential for further decline. Under ultra-low interest rate environments, the appeal of interest-free assets like gold has significantly increased.

Japan’s Fiscal New Chapter, Central Bank on the Brink of Rate Hike

In Japan, Prime Minister Sanae Yoshida announced the FY2026 budget, totaling approximately 122.3 trillion yen, an increase of about 6.3% compared to this fiscal year, setting a record high for initial budgets. Despite the record scale, new government bond issuance is controlled at 29.6 trillion yen, the second consecutive year below 30 trillion yen, reducing debt dependence from 24.9% to 24.2%—the first time in 27 years to fall below 30%, reflecting Japan’s efforts to balance economic growth and fiscal discipline.

On the monetary policy front, Bank of Japan Governor Kazuo Ueda has taken a firm stance. He stated that Japan’s core inflation is steadily approaching the 2% target, and the central bank is prepared to continue raising interest rates. Ueda pointed out that the tight labor market and companies passing on rising labor and raw material costs are creating a mechanism where wages and inflation rise in tandem. Since real interest rates remain extremely low, as long as the baseline scenario is met, the BOJ will continue to push up rates.

US Stock Market Outlook Adjusts, Semiconductor Industry Hits New Highs

Looking ahead to 2026, CFRA Chief Investment Strategist Sam Stovall expressed skepticism—achieving double-digit gains in US stocks requires all engines running at full throttle, which he considers unlikely. He projects the S&P 500 target to be 7,400 points by year-end, only a 7% increase from current levels, making a big rally next year unlikely.

However, the semiconductor industry is optimistic. Bank of America semiconductor analyst Vivek Arya predicts that global semiconductor sales will grow 30% in 2026, surpassing the $1 trillion mark for the first time. He believes AI remains in the middle of a decade-long structural transformation, with industry trends upward led by top companies. He highlights six firms as the best investment targets: NVIDIA, Broadcom, Lam Research, KLA, AMD, and Cadence Design Systems.

Additionally, NVIDIA’s licensing agreement with AI chip startup Groq has attracted market attention. NVIDIA will be licensed to use Groq’s chip technology and has hired its CEO. Groq will continue to operate as an independent company, with founders Jonathan Ross, President Sunny Madra, and engineering team members joining NVIDIA. This cooperation reflects increasing competition in the “reasoning” domain.

Market signals are clear: short-term RMB appreciation is unlikely to continue, precious metals shine anew, and global central bank policies are increasingly diverging.