Gold prices maintained their position just below the record high reached on Wednesday. This stability is supported by expectations of a Federal Reserve rate cut and declining US bond yields. Meanwhile, geopolitical tensions and economic data continue to sway global markets. In Europe, the potential for new tariffs from President Trump places the European Union on edge, while Germany faces its own economic challenges. The ongoing trade dynamics between the US and China further influence market behaviors.
Germany's industrial sector experienced a significant downturn with industrial orders slumping by 6.3% year-on-year in December. This marks a considerable increase from the previous decline of 1.4%. Despite this, Germany's factory orders saw a robust rebound in December, indicating a potential sharp turnaround in the country's manufacturing sector. However, this recovery has not relieved the Euro from selling pressure, as indicated by its performance in the currency markets. The EUR/USD pair fell by 0.14% to 1.0387, reflecting ongoing concerns about the Eurozone's economic outlook. Additionally, the Euro remained the weakest against the Japanese Yen.
The Pound Sterling also faces potential downward pressure as market participants anticipate policy adjustments from the Bank of England. Expectations are high that the Bank will resume its policy-easing cycle by lowering interest rates by 25 basis points to 4.5%. This speculation has already impacted the Pound's performance, with GBP/USD halting its three-day winning streak, trading around 1.2490 during Asian hours on Thursday.
In parallel, the US-China trade war continues to affect global market sentiment, enhancing demand for safe-haven assets such as gold. The precious metal has become an attractive option for investors seeking stability amidst escalating trade tensions and uncertainty over future economic policies.
President Trump’s trade policies remain a focal point, with the European Union potentially becoming his next tariff target. In contrast to his previous position, President Trump appears to have less leverage over China in this round of trade discussions. This shift adds another layer of complexity to an already intricate international trade landscape.