Gold plunges 6% as record-breaking rally fizzles

Good morning and welcome back to FirstFT Asia. In today’s newsletter:

• Gold loses lustre

• OpenAI launches a web browser

• The US army turns to private capital

• Why are smartphones getting so big?

Gold tumbled more than 6 per cent yesterday, on course for its biggest daily drop in more than 12 years, as this year’s record-breaking bullion rally went into reverse.

Getting ‘frothy’: After reaching a high of $4,381.52 a troy ounce on Monday, prices sank by as much as 6.3 per cent to $4,082.03 yesterday in what many saw as a long-overdue correction. “It’s getting a little bit frothy up here,” said Nicky Shiels, analyst at MKS Pamp. “The main catalyst is extremely overbought conditions — the rally is maturing.”

Why gold has surged: The bullion rally has been fuelled by investor concerns about growing government debt levels, the health of the US dollar, and a dash for safe havens sparked by Donald Trump’s trade war.

Why the rally fizzled: Analysts said an apparent thaw in US-China trade tensions, a recent rebound in the US dollar and the absence of key data on how investors are positioned in futures markets — because of the US government shutdown — were among the catalysts for Tuesday’s fall. The gold-buying season in India, the second-biggest consumer of the precious metal, is also drawing to a close with the end of Diwali and the beginning of wedding season. Read the full story.

Here’s what else we’re keeping tabs on today:

• Economic data: Japan reports September trade figures. Malaysia publishes monthly inflation data.

• Monetary policy: Indonesia’s central bank is expected to cut interest rates for a fourth consecutive meeting. (Reuters)

• Results: Tesla, Hermès, Barclays and EQT report earnings.

Five more top stories

1. Japan’s parliament has elected Sanae Takaichi as the country’s first female prime minister. Investors welcomed the vote, sending stocks in Tokyo to a record high as they anticipated increased spending on defence, potential tax cuts and a push to restart Japan’s nuclear power plants. Read more on a historic day in Tokyo.

2. A summit between Donald Trump and Vladimir Putin to end the war in Ukraine has been cancelled, the White House confirmed. The decision to call off the summit in Budapest, Hungary, came after US secretary of state Marco Rubio and the Russian foreign minister Sergei Lavrov spoke by phone yesterday. Read more about the U-turn.

3. OpenAI has launched a web browser as it seeks to compete with Big Tech groups such as Google. The browser, called Atlas, includes a ChatGPT interface and an “agent mode”, in which artificial intelligence can complete tasks — such as booking tickets or conducting research — on the computer, based on user instructions. Here are more details.

4. Korean Air’s net profit plunged nearly 70 per cent in the third quarter as Trump’s tariffs and hardline immigration policies weighed on the airline’s cargo and passenger businesses. Many South Koreans remain reluctant to travel to the US after an immigration raid on a Hyundai-LG factory in Georgia last month.

5. The US army has asked private equity groups including Apollo, Carlyle, KKR and Cerberus to pitch “meaty” strategic projects to help the service fund a $150bn infrastructure overhaul. The proposals mark an unprecedented effort to enlist some of Wall Street’s biggest investors directly in US national security.

News in-depth

The last time Indian farmers descended on New Delhi, they dealt Narendra Modi a rare political blow, forcing him to backtrack on agricultural reforms. Now farmers are warning they will return if the prime minister’s government makes too many concessions on agriculture in trade talks with US President Donald Trump.

We’re also reading . . . 

• Louvre heist: France will not be reimbursed for the loss of jewellery stolen from the Paris museum, after the French government confirmed the objects were uninsured.

• Military briefing: Close to Venezuela, the US has carried out its largest military build-up in the Caribbean for decades. Here are the forces Trump has sent.

• Pocket problem: Sarah O’Connor prefers a smaller mobile phone. But capitalism is not giving her what she wants. Are manufacturers the ones to blame?

Join Sarah O’Connor and John Burn-Murdoch for a live Ask an Expert Q&A on Thursday as they tackle your questions on how AI is reshaping the world of work. The conversation coincides with the launch of ‘The AI Shift’, their new newsletter, which you can sign up to here.

Chart of the day

We live in an age of populist demagogues, a phenomenon that is both politically and economically damaging, writes Martin Wolf. How damaging is illustrated by the fate of Argentina, a country that has been plagued by populism since the rule of Hipólito Irigoyen in 1916.

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