Offshore Yuan Pierces 7.0 as Gold Corrects in Holiday Trade

Thin holiday liquidity amplified moves in global markets this week, with the Chinese Yuan staging a significant rally against the Dollar, while precious metals retreated from record valuations.

RMB Breaks Key Psychological Barrier

The offshore Yuan (CNH) strengthened past the 7.0 per Dollar mark for the first time since late 2024, driven by robust export data and a seasonal surge in corporate settlement demand.

Despite looming headwinds—including the US announcement of new Section 301 tariffs on Chinese semiconductor products—market sentiment remains buoyed by China's strong trade surplus. However, analysts caution that the pace of appreciation may be tempered by the People's Bank of China (PBOC), which continues to use the daily fixing and swap market tools to manage volatility. Deutsche Bank forecasts the RMB could appreciate further to 6.7 by late 2026, though short-term fluctuations depend heavily on the evolving liquidity environment and US trade policy implementation.

Commodities: Gold Slips, Silver Shines

In the commodities sector, Gold (XAU/USD) underwent a technical correction, slipping below the $4,500/oz handle after touching fresh highs. The pullback is attributed to profit-taking amidst lighter volume. Conversely, Silver maintained its bullish momentum, trading firmly above $71/oz, supported by industrial demand and a massive 149% year-to-date rally that has significantly outperformed the yellow metal.

Market Outlook

With major exchanges in the US, Europe, and South Korea closed for Christmas, volatility in open Asian markets highlights the sensitivity of asset prices to order flow. Investors are now positioning for 2026, weighing the resilience of the US “soft landing” narrative against the resurgence of inflation risks in Japan and trade fragmentation in Asia.