Gold and silver plunge sharply, creating a worst weekly performance; Putin's residence is attacked, causing a shift in Russia-Ukraine negotiations; Federal Reserve chairperson candidate remains uncertain.

Market Scan

On Tuesday night trading, major global asset prices showed divergence. The precious metals sector was hit hard, with gold down 4.42% to $4,332.2 per ounce, silver plunging 9%, palladium dropping 17%, and platinum falling 15%, marking the largest single-day decline of the week. Meanwhile, WTI crude oil rose against the trend by 1.58% to $57.8 per barrel.

Cryptocurrency markets experienced increased volatility, with Bitcoin at $87,085, down 0.89% in 24 hours; Ethereum at $2,931.07, down 0.61% in the same period. Latest data shows Bitcoin at a current price of $92.75K, a 24-hour decline of -1.21%; Ethereum at $3.25K, a 24-hour increase of +2.13%.

The stock markets generally adjusted downward, with the three major US indices falling: Dow Jones down 0.51%, S&P 500 down 0.35%, Nasdaq down 0.5%. European markets showed mixed movements: UK FTSE 100 slightly down 0.04%, France CAC 40 up 0.1%, Germany DAX 30 up 0.05%.

The US Dollar Index slightly declined by 0.04% to 98.0, and the 10-year US Treasury yield retreated to 4.11%, down 2 basis points from the previous trading day. In Hong Kong stocks, the Hang Seng night session futures closed at 25,603 points, 32 points lower than the previous trading day.

CME Raises Margin, Precious Metals Under Pressure

The Chicago Mercantile Exchange announced a comprehensive adjustment of margin requirements for recent popular futures contracts and their settlement price contracts, triggering a chain reaction in the precious metals market. With the Federal Reserve Chair candidate imminent, market expectations for interest rate direction shifted, causing safe-haven assets like gold and silver to decline simultaneously.

Fed Chair Uncertainty Moves Market Sentiment

Trump stated that his preferred Fed Chair candidate “has not changed,” and plans to announce the new Fed leadership in January next year. Additionally, Trump is considering suing current Fed Chair Powell for incompetence, criticizing his interest rate policies and the handling of the Fed building renovation. Trump said Powell should resign and indicated he might still consider removing him. Market participants are focusing on the Fed’s December meeting minutes released on Tuesday, seeking policy clues.

Russia-Ukraine Tensions Escalate, Negotiation Outlook Changes

Russian Foreign Minister Lavrov claimed that Ukraine attempted to attack Putin’s residence in Nizhny Novgorod, northwest Russia, with 91 drones early Monday, all of which were destroyed. Russia has identified targets and timing for retaliatory actions against Ukraine. Lavrov emphasized that Russia does not intend to withdraw from peace negotiations, but given Kyiv’s turn toward state terrorism, Russia’s stance on negotiations will be adjusted.

Ukrainian President Zelensky later issued a statement denying the allegations, calling them false and fabricated to justify ongoing attacks on Ukraine, especially Kyiv. Ukraine believes Russia is avoiding the necessary responsibility to end the war.

US Operations in Venezuela Details Emerge

Trump revealed in a radio interview that US forces destroyed a large facility in Venezuela last week but did not provide details. US officials indicated that the destroyed facility was related to drug operations. This has sparked speculation that US forces may have launched ground strikes. Recently, the US has conducted multiple operations against drug trafficking vessels in the Caribbean and seized oil tankers under the guise of combating drug smuggling.

Bank of Japan Continues to Expect Rate Hikes

The Bank of Japan released a summary of opinions from its December policy meeting, with several policymakers advocating for further increases in the policy interest rate. The summary shows some members calling for continued rate hikes at intervals of a few months, as real interest rates adjusted for inflation remain negative. One member said the current rate is still far from neutral, while others noted that the yen’s weakness and rising long-term rates partly stem from the BOJ’s policy rate being too low relative to inflation. The BOJ raised its policy rate from 0.5% to a 30-year high of 0.75% during the December 18-19 meeting.

Bank of America Forecasts Trade Tensions to De-escalate by 2026

Bank of America CEO Moynihan stated that after the impact of tariffs on the economy in 2025, the Trump administration is expected to de-escalate trade tensions by 2026. Moynihan pointed out that BofA predicts trade conflicts will “de-escalate rather than escalate,” with an average tariff of around 15%. Countries that do not commit to purchasing US goods or lowering non-tariff barriers will face higher tariffs. He estimates tariffs will “rise from a common 10% to a broad 15%,” with limited overall impact. However, China’s situation is different, and the US-Mexico-Canada Agreement (USMCA) is also under review for next year. Overall, global trade wars are nearing an end.

Iran Nuclear Issue Heats Up, Trump Reaffirms Hardline Stance

Trump met with Israeli Prime Minister Netanyahu at Mar-a-Lago in Florida on Monday. When asked by reporters, he threatened that if Iran continues developing ballistic missiles, the US will support attacking Iran; if Iran develops nuclear weapons, the US will support swift strikes. Trump said Iran wants an agreement and should reach one, but sometimes things don’t go as planned. He warned that if Iran re-arms, the US will defeat it.

The Israeli government reportedly prepared an Iranian intelligence dossier, which Netanyahu will submit to the US during his visit, and inform Trump that Israel may strike Iranian military facilities again. Netanyahu will also meet with US Secretary of State Blinken, focusing on the future of Gaza and issues related to Hezbollah and Iran. The visit coincides with a critical stage of the Gaza ceasefire agreement implementation, and the security landscape in the Middle East faces turbulence.

SoftBank Invests $4 Billion to Acquire DigitalBridge

SoftBank Group Japan announced it will acquire digital infrastructure investment firm DigitalBridge Group for $4 billion. The purchase price is $16 per share, a 15% premium over DigitalBridge’s Friday closing price, valuing the company at $2.92 billion. The deal is expected to close in the second half of next year. DigitalBridge’s stock rose about 10% to $15.28.

DigitalBridge invests in data centers, cell towers, fiber networks, small cell systems, and edge infrastructure. As of September 30, the company managed assets of approximately $108 billion, making it one of the largest dedicated investors in the digital ecosystem.

Nvidia Completes Acquisition of Intel Shares, Reshaping Semiconductor Landscape

Nvidia announced on Monday that it has completed the purchase of $5 billion worth of Intel shares, fulfilling the transaction announced in September. The leading AI chip designer acquired over 214.7 million common shares of Intel at $23.28 per share through a private placement. The US Federal Trade Commission approved Nvidia’s investment in Intel earlier this month. This deal is seen as a crucial financial boost for Intel after years of missteps and capital-intensive expansion draining its finances.

Key Events This Week

Important economic data to be released include Switzerland’s December KOF leading indicator, US October FHFA house price index monthly rate, US October S&P/Case-Shiller 20-city seasonally adjusted house price index annual rate, US December Chicago PMI, US weekly oil rig count through January 2, Federal Reserve’s monetary policy meeting minutes, and US API weekly crude oil inventories through December 26. Markets await these indicators to guide future policy directions.