Asian markets began the week on a strong footing, buoyed by expectations of easier US monetary policy next year, while precious metals pulled back after a sharp rally.
At the same time, geopolitical tensions resurfaced in East Asia as China announced large-scale military drills around Taiwan.
In crypto markets, Bitcoin staged a notable rebound, climbing back above the $90,000 mark, though uncertainty over the broader macro backdrop continues to cloud its outlook.
Asian markets advance on rate-cut expectations
Asian equities pushed higher on Monday, with MSCI’s broadest Asia-Pacific index rising 0.40% to its highest level since early October.
The index has gained more than 25% this year, driven largely by technology stocks as enthusiasm around artificial intelligence remained strong into year-end.
South Korea’s Kospi jumped 1.87% to a near two-month high, taking its annual gains to about 75%, its strongest performance since 1999.
Taiwan’s benchmark index rose 0.8% to a record high, while Japan’s Nikkei slipped 0.3%.
Markets were supported by expectations that the US Federal Reserve would continue cutting interest rates next year.
The dollar hovered near its lowest level in almost three months, with the dollar index down slightly on the day and on track for a near 10% decline for the year, its steepest drop since 2017.
Investor attention during the holiday-shortened week is expected to focus on the minutes from the Fed’s most recent policy meeting, due Tuesday.
The central bank cut rates earlier this month and projected just one more cut next year, even as traders continue to price in at least two.
Precious metals pull back after parabolic rally
Precious metals retreated on Monday after a powerful rally earlier in the session and over the year.
Silver briefly surged above $80 per ounce for the first time before sliding sharply in volatile trading.
Spot silver later fell 1.3% to $78.12 per ounce, after touching an all-time high of $83.62.
Gold eased as well, slipping about 0.4% to $4,512.74 per ounce after hitting a record high of $4,549.71 on Friday.
Platinum and palladium also pulled back after reaching all-time highs, with palladium dropping as much as 8%.
Analysts said profit-taking and easing geopolitical tensions weighed on prices.
Charu Chanana, chief investment strategist at Saxo, said in a Reuters report that precious metals have been lifted this year by rate-cut expectations, supply concerns, and hedging against geopolitical and fiscal uncertainty, but warned that the late-year surge has increased volatility risks.
Despite the pullback, the broader outlook remains supportive.
Silver has surged 181% year-to-date, while gold is up around 72% in 2025, aided by expectations of lower rates, central bank demand, and diversification away from the dollar.
China announces large-scale drills around Taiwan
Geopolitical risks returned to focus after China announced it would conduct live-fire military drills around Taiwan on December 30.
The exercises, dubbed “Justice Mission 2025,” will involve the People’s Liberation Army’s Eastern Theater Command and include army, navy, and air force units.
Beijing said the drills are intended to test its ability to carry out precision strikes against key targets.
Taiwan responded by calling on China to halt what it described as irresponsible provocations, while placing its own forces on high alert.
Bitcoin rebounds above $90,000
Bitcoin showed renewed strength on Monday, surging past $90,000 after weeks of pressure.
The cryptocurrency found support above $85,500 and climbed above $88,000 before reaching an intraday high of $90,143, according to TradingView data.
The move brought Bitcoin close to the Fibonacci retracement level near $90,883.
The price is now trading above $90,038 and its 100-hourly simple moving average, a short-term positive signal.
Upside targets are seen around $90,200 and $90,500, with further resistance near $91,500 and $92,000.
However, downside risks remain. Immediate support lies at $88,000, followed by $87,250 and $86,500.
Bitcoin continues to trade below its 365-day moving average, a key long-term indicator, and faces year-end pressure.
Unless it rises more than 3.5% above its yearly open of about $93,374, Bitcoin is set to close the year in the red.
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