Market News

Gold prices were little changed on Wednesday morning as investors refrained from making significant moves ahead of the US Federal Reserve’s latest interest rate decision, due later in the day.

Gold futures were flat at $3,322.90 per ounce at the time of writing, while spot gold was also muted, at $3,330.98 per ounce.

The Federal Reserve is expected to leave its benchmark interest rate unchanged within the 4.25% to 4.5% range despite persistent calls from US president Donald Trump to lower borrowing costs. Traders continue to price in a possible rate cut in September.

"There could be a chance that the Fed may start to tilt towards the dovish side of the pendulum, and that is being portrayed on the Treasury yields," Oanda senior market analyst Kelvin Wong said.

Expectations of looser monetary policy are contributing to bullish sentiment for gold, which has already gained more than 27% this year, outperforming most major asset classes.

Investment firm Fidelity believes bullion could climb as high as $4,000 an ounce by year-end, buoyed by a weakening US dollar and a pivot by the Fed towards rate cuts.

Speaking to Bloomberg, Ian Samson, a fund manager at Fidelity, said the firm remains optimistic on the outlook for gold. “The rationale for that was that we saw a clearer path to a more dovish Federal Reserve,” he said.

Samson added that some cross-asset portfolios had increased their exposure after gold prices pulled back from a record high of $3,500 reached in April. In certain cases, allocations were doubled from an initial 5% over the past year.

He also noted that August tends to be a softer month for risk assets, making diversification more appealing. “More diversification makes sense,” Samson said.

Oil 

Oil prices were mixed in early European trading as investors assessed potential geopolitical developments after US president Donald Trump significantly shortened his deadline for Russia to end its military campaign in Ukraine.

Brent crude futures slipped 0.2% to trade at $70.22 per barrel, at the time of writing, while West Texas Intermediate futures climbed by 0.1% to $69.28 a barrel.

The price moves came a day after Trump warned of sweeping measures against Russia, including the imposition of 100% secondary tariffs on countries continuing to trade with Moscow. The president said such measures would come into force unless progress was made towards ending the war within 10 to 12 days, an acceleration from the previously stated 50-day window.

The announcement has heightened tensions with Beijing, Russia’s largest oil customer. At a press conference in Stockholm, where US officials are holding trade talks with the EU, treasury secretary Scott Bessent warned that China could face “substantial tariffs” if it continues its current purchasing practices.

Analysts at JP Morgan noted in a report that while China is unlikely to adhere to US sanctions, India has indicated a willingness to comply, potentially jeopardising 2.3 million barrels per day of Russian oil exports.

Meanwhile, in Venezuela, international partners of state oil company PDVSA remain in limbo as they await formal US approval to resume operations. Talks held last week between Washington and Caracas raised the prospect of easing sanctions, a move that could bring Venezuelan crude back to market and help offset upward pressure on global prices.

Pound 

The pound was muted against the dollar on Wednesday morning, trading flat at $1.3361, and is expected to remain under pressure as the Bank of England (BoE) is almost certain to cut interest rates in next week’s monetary policy meeting.

Markets have become increasingly confident that the BoE will reduce its key borrowing rates on 7 August as UK labour market conditions have cooled down, following an increase in employers’ contributions to social security schemes.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was higher at 98.78.

Elsewhere in currencies, the pound was also muted against the euro, trading at €1.1563 at the time of writing.

In equities, the FTSE 100 (^FTSE) was in the red this morning, down 0.3% to 9,107 points.