Gold prices pulled back from fresh highs on Thursday, cooling off as traders as looked to a key decision by the Bank of England (BoE), which confirmed it is cutting interest rates from 4% to 3.75%.
Traders will also be keeping a close eye on a rate decision by the European Central Bank (ECB), which is also due Thursday, along with US inflation data.
While the BoE was widely expected to cut rates, the ECB is expected to hold pat, leaving the deposit rate at 2% and the main refinancing rate at 2.15%.
Gold futures (GC=F) were trading 0.4% lower by the afternoon in London, around the $4,354 mark. For the year-to-date the yellow metal is still up more than 67.1%. Gold’s spot price was also 0.4% lower.
Investors typically flock to gold as a haven asset, in times of economic uncertainty or volatility.
Gold’s ascent earlier in the week was linked to a weaker dollar, which made dollar-denominated bullion cheaper for overseas buyers. The dollar index (DX-Y.NYB), which tracks the greenback against a basket of currencies, ticked up 0.2% on Thursday.
Oil prices were lower on Thursday after a jump earlier in the week triggered by an order by president Donald Trump to blockade all sanctioned oil tankers entering and leaving Venezuela, injecting fresh geopolitical risk into a market already weighed down by concerns over weak demand.
Brent crude (BZ=F) traded up 0.2% to around $59.79 before dipping 0.1% to around the $59.61 mark, while West Texas Intermediate (CL=F) was almost flat, changing hands at nearly $56 per barrel. Despite the moves, both measures are on course for a weekly loss, still.
Trump has ordered a blockade of all sanctioned oil tankers entering and leaving Venezuela. He said he regards the country’s rulers as a foreign terrorist organisation.
While many vessels lifting oil in Venezuela are under sanctions, others transporting the country’s crude, as well as oil from Iran and Russia, are not. Tankers chartered by Chevron (CVX) are also carrying Venezuelan crude to the US under an authorisation previously granted by Washington.
The pound sold off against the dollar on Thursday morning before trading higher by the afternoon following the BoE interest rate decision. It was around the $1.34 mark by 12.30pm.
Meanwhile, the dollar index (DX-Y.NYB) ticked up 0.2%, lifted alongside US stock futures. Traders are looking to the latest reading on consumer inflation that could help set expectations for the path of interest rates. On Wednesday, Fed governor Chris Waller signalled support for rate cuts before the release of the CPI update.