The pound fell against a strong dollar on Monday morning, as traders digest fresh threats from president-elect Donald Trump to levy a 100% tariff on the nine BRICS nations.
“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump wrote on social media on Saturday.
Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the United Arab Emirates are included in the bloc.
The call is an escalation from previous weeks where Trump said he would set a 50% tariff on imports from China, Canada and Mexico.
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“We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy,” Trump wrote on his social media platform Truth Social.
Sterling traded around 0.4% lower on Monday against the dollar, falling to just below the $1.27 mark. The pound has slumped against the dollar in recent months. In September, it traded as high as $1.34.
Meanwhile, sterling (GBPEUR=X) rose 0.4% against the euro to around 1.20, as political tensions flare in France.
Gold dropped around 1% in early trade on Monday, following a dip of around 3% last week. Moves lower come as the dollar strengthens and US Treasury yields rise. Gold was around $2,652 at the time of writing.
A strong dollar tends to increase the price of gold for buyers in other currencies.
The dip last week was driven by the ceasefire agreement between Israel and Hezbollah as traders retreated from haven assets on the expectation of less chaos in the region. However, that peace is in doubt. Coupled with Russia’s escalating war on Ukraine, gold could be back on the radar for traders who have been selling.
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The yellow metal is up around 29% this year amid geopolitical uncertainties.
“Gold prices are likely to remain in focus this week after a modest recovery last week,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
“However, the strength of the US dollar and the slim odds of a Fed rate cut may create headwinds for the yellow metal. Additionally, escalating geopolitical tensions, particularly in Syria, could lend support to gold prices as investors seek safe-haven assets.”
Oil prices bounded higher on Monday, rallying alongside Asian equities. The moves come ahead of an OPEC+ meeting on Thursday which will give more direction on supply.