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Gold prices held near their highest level in more than seven weeks on Monday as further US Federal Reserve cut bets and a weaker dollar supported demand.
Gold futures rose 1.2% to $4,381.10 an ounce, while spot gold climbed 1.3% to $4,349.73 at the time of writing.
“Gold is likely to remain well bid into US non farm payrolls, as evidence of labour market slack would keep front end yields capped and the dollar weak, supporting a push toward $4,380 to $4,440 after a firm rebound from the $4,243 support zone,” said Kelvin Wong, senior market analyst at OANDA.
Markets remain focused on the Federal Reserve’s policy outlook after the US central bank delivered a 25 basis point rate cut last week in a rare split decision, while signalling a likely pause as inflation remains sticky and the labour outlook uncertain.
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Investors are currently pricing in two rate cuts next year, with this week’s US jobs report seen as a key test of those expectations.
“Gold trades sharply higher above $4,345, closing in on its all-time high as the macro backdrop turns supportive with the Fed cutting again, and we could see a year-end run higher,” said Neil Wilson, UK investor strategist at Saxo Bank.
Non-yielding assets such as gold typically benefit from a lower interest rate environment.
Oil prices rose in early European trading as concerns over supply disruptions linked to rising tensions between the US and Venezuela outweighed worries about oversupply and the potential impact of a Russia-Ukraine peace deal.
Brent crude futures advanced 0.4% to $61.05 per barrel, while West Texas Intermediate gained 0.1% to $57.50.
“Peace talks between Russia and Ukraine have swung between optimism and caution, while tensions between Venezuela and the US are escalating, raising concerns about potential supply disruptions,” said Tsuyoshi Ueno, senior economist at NLI Research Institute.
“Still, with markets lacking clear direction, oversupply concerns remain strong and unless geopolitical risks escalate sharply, WTI could fall below $55 early next year.”
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Venezuela’s oil exports have fallen sharply since the US seized a tanker last week and imposed fresh sanctions on shipping companies and vessels doing business with the Latin American producer, according to shipping data, documents and maritime sources.
Both contracts fell more than 4% last week, weighed down by expectations of a supply surplus in 2026.
Sterling edged higher against its major peers on Monday ahead of the Bank of England’s interest rate decision later this week.
Sterling was up 0.1% against the dollar, trading at $1.3382, and 0.1% higher versus the euro, trading at €1.1393.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, slipped 0.1% to 98.31.
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The pound is bracing for potential volatility amid a heavy schedule of economic data releases and growing expectations that the Bank of England will cut interest rates by 25 basis points to 3.75%.
Analysts at Deutsche Bank expect the central bank on Thursday to cut rates by 25 basis points, with a narrow 5 to 4 vote split, citing signs of easing inflationary pressures and a softening labour market. In October, the UK core consumer price index, which strips out volatile components such as food and energy, rose 3.4% year on the year, its smallest increase since March.
Ahead of the policy announcement, UK consumer price data for November is due on Wednesday and is expected to show core inflation unchanged at 3.4%.
In equities, the FTSE 100 (^FTSE) was higher on Monday morning, up 0.6% to 9,709 points. For more details on market movements, check our live coverage here.
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