Market turbulence this year has largely bypassed equities, with the sharpest moves showing up instead in metals, currencies and commodities, Bloomberg News reported Sunday.
Through January, fears of an AI-driven stock bubble failed to translate into broad equity volatility. The Cboe Volatility Index (VIX) remained below its one-year average even as other markets lurched. Gold (XAUUSD:CUR) surged to record highs before suffering its steepest one-day drop in decades. The U.S. dollar (DXY) slid sharply on speculation of yen-support measures and fresh geopolitical headlines tied to Donald Trump. Oil prices (CO1:COM) (CL1:COM) climbed to their highest level since late summer.
Derivatives data show geopolitical uncertainty driving these swings, with volatility in gold, oil and foreign exchange far outpacing that of equity indexes. In stocks, the turbulence has been concentrated in individual names rather than the market as a whole. Microsoft (MSFT), for example, dropped 10% after reporting heavy spending and slower cloud growth, while broader indexes stayed rangebound as gains and losses offset each other.
Gold has been the standout. Even after a sharp late-month pullback, bullion posted its strongest monthly gain since the late 1990s. Options activity and ETF flows hit records, with investors piling into products such as SPDR Gold Shares (GLD), which has attracted tens of billions of dollars in recent months. Bank of America’s bubble-risk measures for gold derivatives have climbed to levels historically linked to large price swings.
Unlike its traditional safe-haven role, gold has traded with rising prices and rising volatility at the same time, a pattern more commonly associated with speculative assets. Implied volatility on gold ETFs briefly reached unprecedented levels relative to the S&P 500 (SP500), signaling growing anxiety about both upside and downside risk.
Currency markets have also been turbulent. Dollar-yen volatility jumped after the pair fell more than 4% in a few days, following signs of official monitoring and mixed signals from U.S. policymakers on the dollar’s value.
By contrast, bond markets have remained comparatively calm. After Trump named Kevin Warsh as his choice to lead the Federal Reserve, investors scaled back extreme rate bets, selling volatility in long-dated Treasurys. Options tied to policy rates also suggest expectations for future cuts have narrowed, even as implied volatility sits near multi-year lows.
Despite the upheaval elsewhere, equity markets continue to show little sign of stress. Some investors have added selective hedges, but the structure of S&P 500 options still points to limited concern that shocks in metals or currencies will spill over into stocks anytime soon, Bloomberg News reported.