By Ankur Banerjee

SINGAPORE (Reuters) – Gold prices jumped to record highs while the dollar rose on Wednesday, putting pressure on the yen and euro. Stocks in Asia struggled as investors hesitated before the upcoming U.S. election.

Expectations about the Federal Reserve's rate cuts have influenced risk sentiment, with traders anticipating measured easing moves. This has led to U.S. Treasury yields hitting a three-month peak and the dollar reaching multi-month highs against other currencies, including 150 yen per dollar, raising concerns from Japanese officials.

MSCI's Asia-Pacific index outside Japan rose slightly by 0.06%, while Tokyo's Nikkei saw slight losses in early trading.

Anderson Alves, a trader with ActivTrades, noted that volatility in the markets is normalizing as significant events, such as the U.S. presidential election and corporate earnings, approach.

Chinese and Hong Kong stocks began the day steadily, supported by anticipated government assistance for the economy.

Investors are focusing on the potential for a Donald Trump presidency, given that his policies might boost inflation and support the dollar. Trump's chances against Democratic candidate Kamala Harris have been improving, although polls indicate a tight race.

With less than two weeks before the Nov. 5 election, market volatility is expected.

The yield on benchmark U.S. 10-year notes stood at 4.216% after hitting a three-month high of 4.222%.

Prashant Newnaha from TD Securities mentioned that the Treasury sell-off is intensifying as markets realize the Fed could reignite inflation if they ease during a strong economy. Improving odds for Trump are dampening expectations for the Fed to continue easing next year, with potential for a six-month pause.

Markets are currently pricing in 41 basis points of cuts this year and another 100 bps for next year. Many traders expect a 25 bps cut next month following strong economic data, despite the earlier 50 bps cut in September.

The dollar’s strength has been reinforced by expectations of cautious Fed rate cuts, with the dollar index soaring to 104.17, the highest since August 2.

The yen fell to a three-month low of 151.74 per dollar in Asian trading, while the euro dropped to $1.0792, its lowest since August 2.

In commodities, gold prices hit a record high of $2,749.07 before settling at $2,743.42, driven by Middle East conflict and uncertainties surrounding the Fed and U.S. elections, which fueled demand for safe-haven assets.

Brent crude futures fell 0.4% to $75.73 per barrel, while West Texas Intermediate crude eased 0.38% to $71.47 after significant gains earlier this week.