The US Federal Reserve’s January 23 decision to help support Japan’s beleaguered yen is believed to be behind gold’s historic price rise past the US$5,000 per ounce level.
The New York Federal Reserve reportedly conducted a “rate check” with currency dealers regarding the US dollar/Japanese yen exchange rate. The procedure used by central banks involves inquiring about the current market quote for an exchange rate between a specific pair of currencies.
The action typically precedes an intervention in the forex market by a central bank. In September 2025, the two countries issued a joint statement committing to cooperating on controlling volatility in the currency markets.
The yen has experienced a weakening trend on a divergence in interest rates between its central bank and other leading economies, as well as fiscal concerns about its massive public debt.
A weaker yen has indirectly led to higher US treasury yields, which the Fed seeks to stabilize to support a softer labor market and ease mortgage rates. Anticipating that the Fed plans to help the Bank of Japan support the yen, traders began selling the US dollar, resulting in a significant decline in its value.
‘There is potentially something larger at play here,’ said David Forrester, senior strategist at Credit Agricole in Singapore, as reported by Reuters. ‘The threat of intervention reflects a broader investor concern that Japanese and U.S. authorities would like a weaker USD. This combined with Trump’s erratic policy-making, including the threat of 100% tariffs on Canadian exports if it signs a trade deal with China, is weighing on the appeal of USD assets.’
A weaker US dollar is a catalyst for a higher gold price as investors seek safe-haven assets.
“There is comfort in holding an asset perceived as secure in a world where the global order may be shifting,” said Chris Weston, head of research at Pepperstone, a financial services company, as per the New York Times.
The next Fed interest rate decision is scheduled for Wednesday (January 28), and market watchers are expecting the central bank to hold rates steady.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.