The yen strengthened further as investors priced in a higher probability of a Bank of Japan interest-rate increase. That rally weighed on the dollar, which in turn gave gold a lift. Gold's advance was capped, however, by rising oil prices and ongoing bets on Federal Reserve rate cuts, according to Investing.com.
Japanese officials sought to keep the currency move orderly. Japan's Katayama said Tokyo and Washington remain aligned on foreign-exchange policy aimed at fostering stable markets, language typically used to discourage disorderly currency swings rather than to signal intervention. Asian equities wavered as the yen surge added to investor caution, compounded by separate concerns over Iran's threats of retaliation in the Gulf.
What remains unresolved is the scale and timing of any actual BOJ move. Markets are trading on expectations, not a confirmed rate decision, leaving room for the trade to unwind quickly if incoming Japanese data does not support a hike.