Pound, gold and oil prices in focus: commodity and currency check, 13 March

Pound (GBPUSD=X)

The pound has surged to a four-month high against the dollar, trading above $1.29, as investors assess the implications of US president Donald Trump's tariff policies.

On Wednesday, Trump threatened to impose retaliatory tariffs on the European Union (EU), following a warning from the 27-nation bloc about counter-tariffs on $26bn worth of US imports. This came after Trump's decision to enforce 25% tariffs on global imports of steel and aluminium took effect, prompting the EU to vow countermeasures.

Concerns of a potential trade war between the EU and the US have provided temporary support to the dollar. The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, was finally steady after two weeks of decline.

However, softer-than-expected US Consumer Price Index (CPI) data for February is likely to cap further gains for the dollar. The CPI report, released on Wednesday, revealed that both headline and core inflation slowed more than anticipated, dropping to 2.8% and 3.1%, respectively. This decline in price pressures could dampen expectations of further tightening by the Federal Reserve, which is seen as negative for the dollar.

Meanwhile, sterling was higher against the euro (GBPEUR=X) on Thursday morning, at €1.1907.

Gold (GC=F)

Gold prices edged up on Thursday morning, bolstered by softer inflation data in the US that fuelled expectations of interest rate cuts, while fresh tariff threats from Trump helped maintain the precious metal’s safe-haven appeal.

Spot gold rose 0.9% to $2,945.32 per ounce, while gold futures gained 0.2% to trade at $2,952.10.

Analysts at Macquarie Group have suggested that bullion could soar to an unprecedented $3,500 an ounce in the third quarter, as investors flock to safe-haven assets amid rising geopolitical tensions. Currently trading near $2,940 an ounce, Macquarie forecasts that gold could average $3,150 an ounce between July and September.

Gold came within $10 of its record high in overnight trading and has risen 12% this year, driven in part by Trump’s escalating global trade war, which has sparked retaliatory actions from China, the European Union, and Canada.

Adding to the uncertainty, fears of a potential federal shutdown in the US have also weighed on markets, as Senate Democrats failed to agree on a stop-gap funding bill on Wednesday.

Macquarie analysts said: “We view gold’s price strength to date, and our expectation for it to continue, as primarily being driven by investors’ and official institutions’ greater willingness to pay for its lack of credit or counterparty risk.”

Oil (BZ=F, CL=F)

Oil prices were higher on Thursday, with Brent crude (BZ=F) returning to above $70 per barrel, supported by a lower-than-expected increase in US crude oil inventories, alongside better-than-expected US consumer price inflation data.

Brent crude futures rose 0.3% to $70.67 per barrel, while US West Texas Intermediate (WTI) crude (CL=F) climbed 0.2% to $67.81 per barrel.

US crude stockpiles increased by 1.4 million barrels in the latest week, according to US government data released on Wednesday. This was smaller than the 2-million-barrel rise anticipated by forecasters. At the same time, US gasoline inventories fell by 5.7 million barrels, well beyond the expected 1.9-million-barrel draw, while distillate stocks also dropped more than anticipated.

“This week, the oil build was smaller than expected and gasoline and diesel draws were larger than expected,” said Josh Young, chief investment officer at Bison Interests, told Reuters. “This evidences stronger demand and could see oil prices rise as a result.”

However, further price gains were limited as investors remained cautious, closely monitoring growing concerns over a potential US economic slowdown and the impact of tariffs on global growth.

In broader market movements, the FTSE 100 (^FTSE) was muted on Thursday morning, just above the flatline at 8,546.91 points at the time of writing.