Oil prices declined for a third consecutive session after Saudi Arabia announced plans to restore roughly half of its East-West pipeline within days, signaling a move to normalize domestic fuel supply and ease local shortages.
In currency and precious metals markets, the U.S. dollar index rose about a third of a percent to hold above 100, trading close to highs seen in March and April of last year. The USDX moved from below 99.5 to above 100 during the week of the Bank of Japan's rate decision, according to Kitco News analysis by Przemyslaw Radomski, a CFA charterholder and founder of the Golden Meadow and The Silver Engineer analytical brands.
Gold advanced approximately $16 to around $4,415 per ounce, continuing to trade inside a two-week range between roughly $4,300 and $4,440. Despite the intraday gain, gold finished the week of the BoJ hike $9 lower on settlements. Silver outperformed gold for the sixth time in ten sessions, maintaining its recent relative strength.
The Bank of Japan raised its policy rate to 1.25% in a split vote, marking the sixth increase of the current tightening cycle. The decision reinforced the dollar's gains and weighed on risk assets, though equity markets had already absorbed much of the move. On Thursday, the S&P 500 rose 1.14% and the Nasdaq climbed 1.69%, marking the best session for both indices since early August. The rally was driven in part by a seven-basis-point drop in the 10-year Treasury yield and a bullish outlook from Nvidia. Nevertheless, the S&P 500 ended the week of the rate hike lower overall.
The 10-year Treasury yield settled back near 4.93%, after closing above 5% on Wednesday for the first time since 2007. The yield pulled back about 11 basis points from Tuesday's high.
Sentiment among individual investors turned sharply bearish. The American Association of Individual Investors reported that its weekly bear count jumped to 53.3% from 39.3%, pushing the bull-bear spread to minus 24.6. The CNN Fear and Greed Index sat at 29, reflecting continued risk aversion.
Historical precedent adds nuance to the current setup. Following the BoJ's June rate hike on a hawkish 9-3 vote, gold lost about 13% over the subsequent month while the dollar gained roughly 3%. In contrast, after Japan's record 15.4 trillion yen in intervention between July 30 and August 26 lifted the yen, the dollar index fell from about 102 in mid-July to 98.8 on August 21, and gold rallied 10% that month.
More recently, on September 3, the yen rallied 2%, the dollar fell, and gold rose about $100 — gains that vanished the following session when U.S. payrolls came in at 162,000, underscoring how quickly cross-asset dynamics can shift on data.
As Radomski noted in prior commentary, a dollar that weakens because another central bank turns more hawkish is structurally different from one that falls because the Federal Reserve turns dovish, a distinction that may help explain the dollar's resilience despite aggressive global monetary policy moves.
