Does the Yen rate hike affect gold? The core focus is on USD/JPY and capital flows

How does a Yen rate hike impact gold? Remember a key logic: monitor the USD/JPY exchange rate + global capital movements

1. The correct order of indicators
First, look at USD/JPY: Yen strength (exchange rate falling) is the premise of everything. If the Yen instead weakens, the subsequent logic is broken.
Second, check the US Dollar Index and US 10-year Treasury yields: Yen strength usually leads to a decline in the Dollar Index and US Treasury yields. When these signals appear, gold benefits from both sides.
Finally, look at gold prices: combine with the key technical levels mentioned earlier to assess market strength.
2. How to use this logic in trading
If the Yen strengthening transmission chain is effective and gold hits a key support level, going long at this point will have a much higher success rate.
Follow the capital flow to hold positions; trading will be more aligned.
Note! The impact of policy events lasts only a few hours to days. For the medium to long term, gold’s fundamentals still matter.

⚠️ These situations, the logic will fail
This is not a 100% foolproof rule! Be cautious of two scenarios:
First, sudden risk aversion: When geopolitical crises or financial risks emerge, Yen and gold will rise together. Their negative correlation with the dollar weakens.
Second, the Bank of Japan adopts a “dovish” stance: Even if rates are raised, if the central bank says “just this once” or “we’ll do it gradually,” the market will think the US-Japan interest rate differential remains, and the Yen may not rise but fall instead. The transmission chain is broken at its root.

Ultimately, Yen rate hikes are not the key; where the money flows after the hike is what truly influences gold!