Pound, gold and oil prices in focus: commodity and currency check, 12 November
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Pound (GBPUSD=X)
The pound slid against the dollar after UK employment data pointed to weakening labour market conditions.
The Office for National Statistics (ONS) reported that the UK unemployment rate climbed to 4.3% in the three months to September, up from 4% in the previous period and surpassing expectations of 4.1%, suggesting further signs of slack in the economy.
Meanwhile, the US Dollar Index (DX-Y.NYB), which tracks the dollar’s value against six major currencies, surged to a four-month high above 105.82. The dollar’s upward momentum was bolstered by Donald Trump’s victory in the US presidential election, with his party likely to control both chambers of Congress.
Read more: FTSE 100 LIVE: European stocks fall as UK wage report bolsters case for rate cut caution
Investors are anticipating that Trump’s policies, including tariff increases and corporate tax cuts, may heighten inflation, prompting the Federal Reserve to maintain a measured pace in rate adjustments. The CME FedWatch tool indicates a likely 25 basis-point cut in December, though investor sentiment has turned more cautious on this outlook.
Against the euro (GBPEUR=X), sterling was also lower, trading at €1.2051, as concerns over UK economic resilience weighed on the currency.
Gold (GC=F)
Gold prices were muted in early European trading after tumbling from record highs in recent weeks as the dollar firmed sharply amid speculation of what a Trump 2.0 administration will mean for the world and markets.
Spot gold was flat at $2,602.63 per ounce, while US gold futures slipped 0.3% to $2,608.70.
The dollar’s ascent, fuelled by the prospect of a Trump-led protectionist approach in the US, has sapped gold of its safe-haven appeal.
With the dollar index rising 0.5% to its highest level since early July, gold became less attractive to non-dollar buyers. Last week, the index surged more than 1.5% to 105.44 following the announcement of Trump's victory.
Read more: UK wage growth barely slows, fuelling interest rate path uncertainty
"The market's attention has focused to the second-order effect since the red wave," said Daniel Ghali, commodity strategist at TD Securities.
"The likelihood of tariffs being imposed relatively early on into Trump's presidency and the resulting strong demand for dollar that is creating. Stronger dollar is weighing on gold prices for the first time in months because it's also associated with increasing odds that the Federal Reserve might delay its easing cycle."
Oil (BZ=F)
Oil prices remained muted as a stronger dollar, coupled with China’s mixed demand outlook, continues to weigh on crude.
