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What’s happening: Gold prices jumped more than 2% on Monday, driven by heightened safe-haven demand and weakness in the US dollar.
What happened: The US dollar index moved lower during Monday’s session, making gold more attractive for foreign currency holders.
US President Donald Trump announced a 100% tariff on movies produced in “foreign lands,” reigniting tariff concerns.
Why it matters: Trump has now turned his focus to a new sector to impose tariffs, under the umbrella of his Make America Great Again initiative. On social media, the US President warned of tariffs on movies produced overseas, which is expected to adversely impact US firms like Walt Disney. The latest tariff threat reignited US economic growth concerns, sending investors flocking towards safe-haven assets.
Weakness in the US dollar lent further support to gold prices on Monday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, declined around 0.1%.
The US Federal Reserve has kept its policy rate unchanged in the 4.25%-4.50% range since December 2024. The US central bank, which is scheduled to announce its monetary policy again on Wednesday, is widely expected to hold rates at the current levels.
Amid tariff concerns, gold prices have hit record highs several times this year, adding more than 26% year to date, as the yellow metal is viewed as a hedge against uncertainty.
US gold futures jumped 2.4% to settle at $3,322.3 an ounce on Monday. The yellow metal extended gains this morning, surging around 1.8%.
In other metals trading, silver prices closed higher at $32.474 an ounce on Monday. Copper rose to $4.6990, platinum closed at $960.80 and palladium settled at $942.60.
What to watch: Investors will continue monitoring tariff-related announcements.
Traders await remarks from Fed Chairman Jerome Powell on Wednesday, to get further insights into the central bank’s monetary policy ahead. Although the Fed is expected to keep rates unchanged this time, it could begin lowering rates with Trump’s tariffs raising concerns over economic growth.
Context: British stocks closed higher on Friday, while remaining closed on Monday for a bank holiday.
Details: The Bank of England, which is scheduled to announce its policy decision on Thursday, is widely expected to cut interest rates by 25 basis points to 4.25%. Investors will also focus on the statement accompanying the policy decision, amid concerns around US President Donald Trump’s tariffs impacting global economic growth.
Markets are pricing in at least two more interest rate cuts of 25 basis points in 2025 in addition to the rate cut expected on Thursday.
Shell’s shares gained more than 2% on Friday after the company posted better-than-expected profits for the first quarter and announced a $3.5 billion share buyback program. NatWest’s stock also rose during the session after the company released its first-quarter results.
UK’s FTSE 100 Index gained 1.17% to close at 8,596.35 on Friday, recording gains for the 15th consecutive session. The domestically focused FTSE 250 rose 0.52% to settle at 20,240.51.
What to watch: Investors await the release of data on UK’s new car sales (1200 UAE Time), S&P Global composite PMI (1230 UAE Time) and S&P Global services PMI (1230 UAE Time) today. New car registrations in the UK, which jumped 12.4% year-over-year to 357,103 units in March, are expected to rise by 3.5% in April.
Analysts expect the S&P Global UK composite PMI to decline to 48.2 in April, from 51.5 in March, while the services PMI is projected to fall to 48.9 in April, from March’s seven-month high of 52.5.
Other Markets: US trading indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.24%, 0.64% and 0.67%, respectively.
Russia’s Ministry of Defence said its military forces have destroyed 13 Ukrainian drones over the Belgorod, Rostov and Bryansk regions. The news sent the RUB/USD pair higher in forex trading this morning.
Vietnam’s industrial production grew by 8.9% year-over-year in April. This being a slowdown from March’s 9.9% surge exerted pressure on the VND/USD forex pair.
China’s Caixin general services PMI fell to 50.7 in April, from 51.9 in the previous month. However, the region’s services activity remaining in the expansion zone sent the CNY/USD pair higher in forex trading this morning.
Australia’s private house approvals declined by 4.5% to a 13-month low of 8,804 units in March, compared to a 1.1% gain in the previous month, exerting pressure on the AUD/USD forex pair.
Singapore’s S&P Global PMI rose to 52.8 in April, from a reading of 52.7 in the previous month. Despite the region’s private sector growth hitting the highest level since last November, the SGD/USD pair fell in forex trading this morning.
Eurozone’s HCOB composite PMI (1200 UAE Time), HCOB services PMI (1200 UAE Time) and PPI (1300 UAE Time), Mexico’s gross fixed investment (1600 UAE Time), Canada’s balance of trade (1630 UAE Time), exports (1630 UAE Time), imports (1630 UAE Time) and Ivey PMI (1800 UAE Time), US balance of trade (1630 UAE Time), exports (1630 UAE Time), imports (1630 UAE Time), Redbook index (1655 UAE Time) and RCM/TIPP economic optimism index (1810 UAE Time), as well as Brazil’s S&P Global services PMI (1700 UAE Time) and S&P Global composite PMI (1700 UAE Time).
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