Gold Crashes as Trade Tensions Ease, Yen Pressured by Japan Election
Daily Markets Insights – 22 October, 2025, Brought to you by Ultima Markets.
Markets opened the session with a slightly improved risk tone, as U.S.–China trade tensions showed early signs of easing:
- Diplomatic progress: U.S. and Chinese officials confirmed they will meet in Malaysia next week to continue negotiations aimed at avoiding escalation of the tariff dispute.
- Trump’s tone softens: U.S. President Donald Trump reiterated optimism that “a fair deal can be reached” , even though the 100% tariff threat for November 1 remains on the table.
- Market response: Investors welcomed the more constructive rhetoric, leading to a mild rebound in equities and reduced safe-haven demand compared to the height of recent tension.
Although optimism is building, the fragility of the talks means market volatility could return quickly if negotiations stall or rhetoric hardens again.
Gold & Silver: Rally Reversed at Resistance
Gold prices plunged sharply on Tuesday, marking their largest single-day loss since 2013, after reaching record highs earlier last week. The precious metal fell more than 6% , as a wave of profit-taking and easing geopolitical fears triggered heavy liquidation across the market.
Several key factors contributed to the selloff:
- Eased Safe-haven demand: Optimism over a potential de-escalation in U.S.–China trade tensions, and improved global risk appetite, reduced gold’s appeal as a hedge.
- Massive profit-taking: After weeks of continuous gains, many investors chose to realize profits, leading to a concentrated release of selling pressure.
- Stronger U.S. dollar: The U.S. Dollar Index rebounded, adding further downside pressure to gold prices, making dollar-denominated gold less attractive to overseas buyers.
XAU/USD, 2-Hour Chart｜Source: Ultima Markets MT5
Technically, gold broke below the $4,200 support after forming a double-top pattern, basically signaling that gold is undergoing a short-term bearish move.
- Now traders will keep an eye on the key level of $4,000 to see if it can hold as a short-term pivot support.
- If this level holds, it could indicate that gold may enter a period of corrective move in a consolidation form for now.
XAGUSD, H2 Chart | Source: Ultima Markets MT5
Silver (XAGUSD) also followed gold’s price action, undergoing a sharp pullback after an impressive rally.
- Technically, silver has shown a clear bearish reversal signal on the 2-hour chart, with a head and shoulders pattern formed.
- With silver now breaking below the $50.80 neckline support, this suggests that the near-term trend has shifted into a bearish phase.
Japan Political Progress Keeps Yen Under Pressure
The yen remains soft as political developments in Japan continue to shape market sentiment. The recent leadership victory of Sanae Takaichi — Japan’s first female Prime Minister — has shifted expectations toward more aggressive fiscal stimulus, which may delay any further tightening from the Bank of Japan (BoJ).
USD/JPY, Daily Chart｜Source: Ultima Markets MT5
The pair continues to trade above the 150 level, keeping upside momentum intact. As long as USD/JPY holds above 150, the bullish bias remains in place. Easing U.S.–China tensions have reduced safe-haven demand for the yen, while Japan’s domestic political backdrop is adding further downside pressure on the currency.
Risk Warning: Trading leveraged derivative products involves high risk and may lead to capital loss.
Author：Joshen Stephen｜Senior Market Analyst at Ultima Markets
Disclaimer: Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.
