The British pound strengthened against the US dollar in early European trading on Friday, climbing 0.3% to $1.2387, as the greenback weakened following remarks from US President Donald Trump about interest rates and tariffs.
In a speech delivered remotely at the World Economic Forum in Davos on Thursday, Trump called for immediate interest rate cuts in the US. “I’ll demand that interest rates drop immediately, and likewise, they should be dropping all over the world. Interest rates should follow us,” he stated.
Trump also warned businesses that failure to manufacture products within the US would result in tariffs. “If you don’t make your product in America, which is your prerogative, then very simply you will have to pay a tariff — differing amounts, but a tariff,” he said. In a separate interview with Fox News, Trump also discussed trade relations with China, expressing a preference to avoid imposing tariffs. “We have one very big power over China, and that’s tariffs, and they don’t want them. And I’d rather not have to use it. But it’s a tremendous power over China,” he added.
Meanwhile, the pound saw a slight decline against the euro, falling 0.2% to €1.1821.
Gold Prices Rise Amid Dollar Weakness and Trade Uncertainty
Gold prices saw a significant rise on Friday, hovering near a three-month high, driven by a weaker US dollar and continued trade uncertainties following Trump’s comments. The spot price of gold increased by 0.6% to $2,772.20 per ounce, while gold futures were up by 0.5% to $2,777.40 per ounce.
As gold is priced in US dollars, a weaker dollar makes the precious metal more affordable for buyers using other currencies. Additionally, gold is considered a safe-haven asset in times of geopolitical and economic instability.
Ole Hansen, head of commodity strategy at Saxo, noted that demand for investment metals continues to be fueled by an uncertain geopolitical landscape, with global tensions and economic shifts prompting investors to seek safer assets. “With Trump 2.0 upon us, this development shows no signs of fading, given the potential risks of tariffs causing inflation to rise and the dollar weakening, removing an obstacle for further gains,” Hansen said.
Oil Prices Stay Flat After Trump’s Comments on OPEC and Oil Prices
Oil prices remained flat on Friday morning, following significant declines the previous session, after President Trump’s comments on oil prices at the Davos summit. Brent crude futures were steady at $78.25 per barrel, while US West Texas Intermediate (WTI) crude hovered around $74.60 per barrel.
Oil prices dropped sharply on Thursday after Trump stated he would ask Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices. “I’m also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You’ve got to bring it down,” Trump said, adding that a drop in oil prices could end the Russia-Ukraine war. “If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue, you’ve got to bring down the oil price. You’ve got to end that war,” he emphasized.
Derren Nathan, head of equity research at Hargreaves Lansdown, noted that Brent crude “obediently followed president Trump’s calls for lower oil prices,” but industry resistance to such mandates is building. “Such a move could undermine profitability for the industry, and Rystad Energy and Wood Mackenzie are now forecasting that total US oil output in Trump’s second term will rise by less than 1.3 million barrels a day,” Nathan said. He added that despite Trump’s calls, the market remains tight, as indicated by the ninth consecutive fall in US inventories, making further price dips uncertain.3
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