- The pound rose by 0.2% to $1.2537 after a sharp decline, boosted by news on potential US trade tariffs.
- Gold prices saw a slight increase, with spot gold rising to $2,640.78 per ounce amid dollar weakness.
- The greenback’s strength and higher US Treasury yields remain concerns for both gold and the pound.
The British pound experienced a small recovery against the dollar on January 7, gaining 0.2% to $1.2537. This followed a report that suggested US president-elect Donald Trump’s team might be reconsidering tariffs.
Gold prices also saw modest gains, rising 0.1% to $2,640.78 per ounce. This uptick was primarily driven by a weaker US dollar and ongoing uncertainty over trade policies.
Commodity and Currency Movements: Pound, Gold, and Oil Prices on January 7, 2025
The pound strengthened slightly after a tumultuous week, recovering to $1.2537 from an eight-month low. The currency had been hit hard by the US dollar’s strength, which surged on expectations of policies from Trump’s return to the White House. News suggesting possible adjustments to trade tariffs sparked some optimism, although Trump’s denials later in the day saw the pound ease back. It remains steady against the euro, which is also facing some turbulence.
Gold prices saw a modest increase, with spot prices rising to $2,640.78 per ounce. This boost was linked to the weaker dollar and ongoing global uncertainties that typically support safe-haven assets like gold. The shift in focus comes after gold had been under pressure in recent weeks due to the strength of the US dollar, which makes gold less attractive as an investment.
Despite the recovery in gold, analysts are cautious, citing that rising US Treasury yields may continue to limit gold’s gains. Gold’s non-yielding nature becomes less appealing in a high-interest-rate environment, where bonds and other interest-generating assets take precedence. The market will be looking closely at future monetary policy decisions to determine whether gold can continue to attract investors.
The oil market wasn’t directly mentioned in this update, but its prices usually respond to similar geopolitical and trade uncertainties. As global trade dynamics shift, oil and energy prices could experience volatility, driven by demand concerns and policy changes under the upcoming administration.
The pound and gold prices are showing some recovery after recent volatility, though higher US Treasury yields and trade uncertainties continue to influence their movements. Traders will be closely watching these developments for further shifts in market sentiment.
“Gold prices have managed to stabilize amid some cooling off in the US dollar overnight, but higher US Treasury yields may remain a key overhang for further gains.” – IG market strategist Yeap Jun Rong.
