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Gold closing in on $4,000/oz record
The gold prices is hitting fresh record highs, again, today, in its strongest year since 1979.
The spot price of bullion has jumped by over 1% today to $3,944 per ounce, as it closes in on the $4000/oz mark.
This means the gold price has jumped by 50% since the start of January, on track for its best annual gains since the Iranian Revolution.
Gold has been driven higher this year by several factors, including rising concerns that government debts are unsustainable.
Sanae Takaichi’s election win in Japan will only have reinforced concerns that politicians will attempt to secure growth through higher borrowing and lower interest rates, and rely on inflation to erode the value of the resulting debt.
Introduction: Yen slumps, Nikkei hits record after Takaichi win Japan's leadership election
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Japan’s stock market has surged to a record high today, while the yen is plunging, after the leadership of the country’s ruling party was surprisingly won by fiscal dove Sanae Takaichi.
Predictions that Takaichi will be a pro-stimulus prime minister has sparked a wave of enthusiastic buying has pushed the Nikkei 225 share index up by 5%, as it gained 2315 points to close at 48,085.
But the yen is very much moving in the other direction – it’s down almost 2% against the US dollar at 150.3¥/$.
Takaichi, who should become Japan’s first female prime minister later this month, is a long-time admirer of Margaret Thatcher. But although she is conservative on social policy, Takaichi takes an un-Thatcherite approach to fiscal policy, and has advocate a revival of government spending and loose monetary policy.
As such, she’s expected to continue Japan’s push to stimulate its economy though fiscal spending and lower interest rates, which would lead to higher inflation and increased borrowing.
Thus the weaker yen, as investors anticipate fewer interest rates hikes in Tokyo than before.
Japanese long-term bond prices have also fallen today, pushing up the yield on its 30-year debt near to record highs, on expectations of higher borrowing and more persistent inflation.
The markets will be calculating how closely Takaichi’s plans will resemble the “Abenomics” programme pushed by former PM Shinzo Abe.
Chris Weston of brokerage Pepperstone explains:
Unlike in late 2024, Takaichi has refrained from talking up Abenomics in this LDP leadership campaign, but most know her underlying stance and her appreciation of Shinzo Abe’s Three Arrows philosophy.
Traders may therefore move to obtain clarity on that position, as well as exactly how influential she may be in shaping the BoJ’s policy thinking, given the October BoJ meeting is seen as a “live” affair and a 25bp hike seen as a real possibility...
The agenda
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8.30am BST: Eurozone construction PMI for September
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9.30am BST: UK construction PMI for September
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6.30pm BST: Bank of England governor Andrew Bailey to give keynote speech at Scotland’s Global Investment Summit 2025
