Gold Continues To Shine

Thursday, 17 March pm: Following the US Fed’s decision to keep rates on hold, today the Bank of England unanimously decided to keep UK interest rates at 0.5%. Just in the same way Janet Yellen gave caution, the decision to keep rates on hold in the UK comes amid global uncertainty fears, whilst sterling weakness in the lead up the referendum could have consequences on the UK economic growth. The rate decision instantly strengthened the pound against both the euro and the US dollar. Vs the euro, the pound had traded negatively during morning trading, with the decision moving it to trade flat at €1.27. Against the dollar, the pound has been trading positively all morning, but moved to 1% stronger following the BoE’s decision to $1.44. The pound is weaker against the euro and dollar by more than 6% and 2% respectively, year-to-date.

Early gains in the FTSE fell back during morning trading, despite miners leading the pack. With no rate rise in the US being announced, commodities bounced, including oil and gold, both trading with more than 2% gains in European trading. Anglo American led the miners with more than 10% gains, whilst Antofagasta, Glencore and Fresnillo also surged more than 8%. Gold itself continued with its impressive year-to-date performance, peaking over 3% to trade at $12.65 per oz. The “safe-haven” commodity is up just short of 20% since the turn of the year, maintaining its position as one of the best performing asset in 2016. Despite the volatile start to the year, oil has rebounded well and continues to sit at 2016 highs, currently 10% above its 2016 entry point.

Following the opening of the US markets, the FTSE retracted its morning losses to end the day +0.4%. The pound continued to strengthen and ended the day +0.6% against the euro at €1.27 and +0.6% to $1.44 vs the dollar. In Europe, the CAC and DAX both ended in the red, lower by 0.7% and 0.9% respectively. Over in the US, at the time of writing the Down Jones and S&P are both in the green, higher by 0.7% and 0.6% respectively.