Pound, gold and oil prices in focus: commodity and currency check, 18 October

Pedro Goncalves
·Finance Reporter, Yahoo Finance UK
4-min read
In this article:

Sterling was higher against the dollar in early European trading, climbing 0.2% to $1.3043 thanks to better-than-forecast economic indicators.

New figures from the Office for National Statistics (ONS) revealed that British retail sales grew by 0.3% in September. Although this marks a slowdown from August’s 1% growth, it significantly outperformed the 0.3% contraction anticipated by City economists.

Read more: FTSE 100 LIVE: European stocks mixed as UK retail sales beat forecasts

The pound was further booster by a subdued dollar, with the lack of economic data leaving the currency vulnerable to shifts in market sentiment. Currently, the mood is cautiously optimistic, exerting downward pressure on the USD.

Against the euro (GBPEUR=X), sterling also managed to push higher, climbing 0.2% to €1.2031 at the time of writing.

Gold prices surged to a record high in early European trading on Friday, driven by safe haven demand as the US presidential election approaches. Additionally, an interest rate cut by the European Central Bank (ECB) provided further support to the precious metal.

At the time of writing, spot gold was trading at $2,705.31 per ounce, reflecting an increase of 0.4%. Meanwhile, US gold futures rose 0.5% to $2,720.

The rise in gold prices comes despite strong US retail sales and labour market data, which have fuelled expectations that US interest rates will decrease at a slower pace in the coming months.

The bullion market has broken out of a tight trading range observed over the past two weeks, hitting new highs as the election draws nearer. Recent polls indicate a closely contested race between vice president Kamala Harris and former president Donald Trump, with less than three weeks left until voters head to the polls.

“Gold rallied to a record high and trades above $2,700 this morning – no stopping it despite the rally in the dollar and real yields in the last month – the 10yr TIPS yield has risen from around 1.53% to 1.80% in the last month,” Neil Wilson, chief market analyst at Finalto, said.

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“Gold: geopolitical premium but also central bank buying and the ever-expanding deficit trade. And rate cuts, even if we see short-term retracements in relative yields,” he added.

According to a Coingecko report, gold emerged as the standout asset, appreciating 13.8% in Q3 2024.

Maruf Yusupov, co-founder of Deenar, said: “Gold has been a standout performer over the past quarter after hitting multiple all-time highs atop a 13.8% surge. Considering gold’s market cap, this growth rate is impressive, especially as it stayed relatively stable compared to Bitcoin, which recorded just 24% over the past quarter.

“Undoubtedly, investor sentiment toward gold saw a more positive twist this year as central bank monetary policies and regional conflict forced the embrace of safe assets.”

Crude oil prices were mixed earlier today following the release of robust retail sales and GDP growth figures from China. However, benchmarks are still on track for a significant weekly loss after last week’s rapid price surge, as concerns over demand have once again overshadowed geopolitical tensions.

Brent crude futures slipped 0.1%, settling at $74.37 a barrel, while US West Texas Intermediate (WTI) (CL=F) crude rose 0.4% higher to $70.94 per barrel during early European trading.

“WTI crude oil prices have seen strong buying at the lows over the previous three sessions as it neared trendline support from the September low,” said Chris Beauchamp, chief market analyst at IG.

“The price is recovering this morning and could be forming a higher low, with a close above $71.00 reinforcing this bullish view. This would then provide the springboard for more gains,” he added.

The US Energy Information Administration’s latest weekly oil inventory report helped fuel a relatively bullish sentiment, helping the benchmarks higher as it reported yet another weekly draw, but it appears that demand remains a bigger priority for traders.

At the same time, geopolitical risks just jumped this week after Israel said it had killed the leader of Hamas, Yahya Sinwar. Israeli forces killed Sinwar in Gaza, prompting an immediate response from Lebanon’s Hezbollah, which said it would escalate the fight with the Israeli state.

Meanwhile, the FTSE 100 (^FTSE) was lower at the open, slipping 0.2% to at 8,369 points. For more details check our live coverage here.

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