Pound, gold and oil prices in focus: commodity and currency check, 21 January

Pedro Goncalves · Finance Reporter, Yahoo Finance UK

Tue, Jan 21, 2025, 3:01 AM 3 min read

Pound (GBPUSD=X)

The pound was lower against the dollar, slipping 0.5% to $1.2250, as the greenback rose after US president Donald Trump said he would probably move to impose tariffs from next month.

The dollar rebounded after Trump said his administration is planning to impose a 25% tariff on imports from Mexico and Canada as early as February 1.

Trump added he was still considering a universal tariff on all foreign imports to the US, before backtracking.

"You'd put a universal tariff on anybody doing business in the United States because they're coming in and they're stealing our wealth," he said, adding that implementation could be "rapid." After this pledge he claimed he was "not ready for that yet."

The pound also took a hit after data from the Office for National Statistics (ONS) showed that average earnings accelerated in the three months ending November.

Sterling was muted against the euro (GBPEUR=X), at €1.1826.

Gold (GC=F)

Gold prices surged to over a two-month high on Tuesday before correcting after Trump's first day in office.

The spot price of gold was muted at $2,723.02 per ounce, while gold futures slipped 0.5% to $2,733.50 per ounce.

Trump has pledged to impose new trade tariffs on its neighbouring countries, and China to bring down its trade deficit. This could provide renewed strength to the dollar, thereby affecting gold prices.

"I believe Donald Trump will result in higher market volatility, while some of his policies might keep inflation higher for longer. This should continue to support safe-haven assets like gold," UBS analyst Giovanni Staunovo said.

A weaker dollar usually drives gold prices higher because it makes the metal cheaper for buyers using other currencies.

"The markets remain firmly in risk-off mode so I would expect any gold price dips to catch bids," said StoneX analyst Rhona O'Connell.

Gold has been viewed as a safe haven during times of economic turmoil. Investors tend to flock to the precious metal during crises, seeking to preserve wealth and hedge against inflation.

"Gold's status as a financial asset makes it likely exempt from broad-based tariffs, and we therefore assign a 10% probability to a 10% effective tariff on gold being introduced within the next 12 months," Goldman Sachs said.