The dollar weakened and funds flowed into gold on Wednesday on concerns spurred by emails showing President Donald Trump's son met with a Kremlin-linked lawyer whose stated goal was to assist Moscow in influencing the U.S. election.
Donald Trump Jr. on Tuesday released emails about a controversial meeting he attended with a Russian lawyer offering "high level and sensitive information" damaging to Hillary Clinton. Those messages show he was told prior to the meeting that the effort was part of the Russian government's support for his father's presidential campaign.
The meeting matters because a special counsel and congressional committees are investigating Russian attempts to influence the 2016 election and whether the Trump campaign colluded with the Kremlin.
The president's legal team has said the elder Trump did not attend the meeting and had no knowledge of it.
That marked a material change in the nature of the Russia investigations, analysts said.
"This no-collusion story is falling apart," said Richard Painter, a professor at the University of Minnesota Law School and the chief White House ethics lawyer in the George W. Bush administration.
Painter noted that the top-three leaders of the Trump campaign, Donald Trump Jr., Paul Manafort and Trump son-in-law Jared Kushner, were all at the meeting.
"They've been saying for months that there was no collusion between the Trump campaign and Russia and yet here we see documented in the emails a clear desire on the part of the Trump campaign to collude with Russia to the extent they need to get damaging information on Hillary Clinton. It's right there in the email. He was eager to do this," Painter told CNBC's "Capital Connection" on Wednesday.
Painter said the revelation would be "very disturbing for Americans who expect to elect their own president, members of Congress without interference from a foreign power."
Stocks in the U.S. initially dropped on the emails' release on Tuesday, but later recovered.
Other market plays, however, were moving more decisively.
For one, traditional safe-haven gold climbed, trading as high as $1,220.35 an ounce in Asian hours on Wednesday, compared with as low as under $1,208 on Tuesday.
The dollar was also getting hit, with the dollar index, which measures the greenback against a basket of currencies, falling as low as 95.592 in Asia trade on Wednesday, from levels as high as 96.174 on Tuesday.
The safe-haven yen also climbed, with the dollar fetching as little as 113.38 yen in Asia trade on Wednesday, down from as high as 114.45 yen on Tuesday.
The euro was among the biggest beneficiaries, rising as high as $1.1483 in Asia trade on Wednesday — its highest since May 2016 — from levels under $1.14 on Tuesday.
Citi analysts said in a Tuesday note that the revelations about the younger Trump's emails may have changed investors' calculus.
"We believe the risk of impeachment proceedings is now higher than before, even if still not our base case," the Citi note said, adding that the inclusion of foreign-government elements increased the risk of allegations of treason, espionage and conspiracy.
Citi said the latest developments would further undermine the Trump's administration's ability to pass key elements of its agenda this year.
"While this is what we had expected, the nature of the allegations will also significantly increase the pressure on the administration, particularly over the question of access of its key advisers to classified and top-secret information," it said, adding that the risk administration figures would resign had risen.
Others also pointed to fresh concerns about political instability in the U.S.