Gold hits record high over $3,000 amid geopolitical tensions and weakening US dollar
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s been a record-breaking year for gold, as nervous investors have sought out safe-haven assets.
And this morning, the precious metal has hit a fresh all-time high above $3,000 per ounce, driven by escalating geopolitical tensions in the Middle East, trade war fears and the weakening US dollar.
Gold touched $3,017.64 per ounce, as news broke that Israeli military forces have launched widespread strikes on targets across Gaza early today, leading to fears that the shaky ceasefire in the region is over.
This means gold has climbed by 15% since the start of this year, having ended December at $2,623/ounce, adding to its 27% surge during 2024.
As this chart shows, it has now doubled over the last five years:
The recent weakness of the US dollar has also pushed up the gold price. The greenback is trading near a five-month low against a basket of other currencies, as traders worry that Donald Trump’s enthusiasm for tariffs will trigger a full-blown trade war, that could push the US into recession.
As analysts at Deutshe Bank put it:
Investors continue to rotate away from the US dollar and find perceived safe havens amidst the heightened policy uncertainty.
Linh Tran, market analyst at XS.com, reports that rising tensions in the Middle East and the escalating U.S.-China trade conflict have both driven investors toward gold as a safe investment channel, adding:
These uncertainties have not only increased demand for gold but have also pushed significant capital inflows into the precious metals market, contributing to gold reaching record-high prices.
The agenda
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9.30am: ONS releases changes to the UK inflation basket
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10am GMT: ZEW eurozone economic confidence survey
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12.30pm GMT: US housing starts/building permits data for February
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1.15pm GMT: US industrial production for February
Key events
Germany’s blue-chip share index has hit a new intraday record high, as investors hope that the Bundestag will approve Berlin’s new proposed debt reforms today.
The DAX is up 1.15%, or 268 points, at 23,423 points.
EU trade surplus with US widens
Trade between Europe and the United States accelerated in January, as firms on both sides of the Atlantic raced to avoid a new trade war.
New data from eurostat shows that European Union exports to the US rose by 16% year-on-year in January, to €46.7b, while shipments the other way rose by 7.5% to €30.5bn.
That swelled the EU’s trade surplus with the US to €16.2bn, up from €11.9bn in January 2024.
In contrast, Europe’s trade deficit with China ballooned to €30.1bn, from €20.6bn, due too a drop in exports and a rise in imports.
Analysts at ING say “some tariff war anticipation effects can be seen in the US trade data”, adding:
The outlook for 2025 is highly uncertain due to the trade war, despite new export orders finally showing signs of bottoming out.
Last week, Donald Trump imposed 25% tariffs on steel and aluminium imports, including from the EU, and is threatening a 200% tariff on wine and champagne from European Union countries unless the EU’s retaliatory 50% levy on American bourbon whiskey is dropped.
The EU also faces the threat of new reciprical and sectorial tariffs being imposed by the US in early April.
The number of companies in England and Wales falling into administration rose last month, but remained lower than a year ago.
There were 2,035 registered company insolvencies in England and Wales last month, 3% more than in January, but 7% lower than in February 2024.
Company insolvencies over the past year have been slightly lower than in 2023, which saw a 30-year high annual number, but have remained high relative to historical levels, the Insolvency Service reports.
The five industries with the most insolvencies in the last year are:
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Construction (4,031, 17% of cases)
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Wholesale and retail trade; repair of motor vehicles and motorcycles (3,631, 15% of cases)
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Accommodation and food service activities (3,474, 15% of cases)
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Administrative and support service activities (2,389, 10% of cases)
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Manufacturing (1,962, 8% of cases).
Kelly Boorman, national head of construction at accountancy firm RSM UK, says:
“Construction continues to experience the highest number of insolvencies above any other sector, which is to be expected given the ongoing burden of expensive debt and fragile supply chain.
We are seeing a strong pipeline of work, however we’re not seeing the volume of delivery increase due to delays in mobilisation and the financial constraints, along with uncertainty in the aftermath of the Autumn Budget. Businesses are therefore preserving working capital and are yet to see the growth they anticipated in 2025.
One of the main financial challenges for construction is the incoming increase to employers’ NIC. The industry is already under-resourced, and the increase to labour costs will squeeze margins.
UK watchdog probing MHA audit of collapsed construction group ISG
Julia Kollewe
Britain’s accounting watchdog is investigating accountancy firm MHA for its audit of the collapsed construction company ISG, in a blow to MHA’s hopes to raise £125m through a stock market flotation.
The Financial Reporting Council said it had begun an investigation of MHA’s audit of IGS’s accounts for 2022. The construction firm, which held more than £1bn of government contracts, fell into administration last September, and 2,200 workers lost their jobs. IGS, which built the velodrome for the 2012 London Olympics, had been struggling financially for some time and failed to secure a rescue deal.
Neil Hallsworth from Nottingham, who worked for ISG as a project manager for more than 15 years, told the BBC at the time that he was “gutted” and that some of the contractors were “owed a fortune”.
It was the biggest collapse in the construction sector since Carillion’s failure in 2018, and forced government officials to look for other contracts to take over ISG’s projects, including prisons upgrades and work to school buildings.
The FRC investigation into MHA’s audit comes just a day after it announced plans for a public listing to raise up to £125m, including a £6m offer to small investors. On Monday, the accounting firm, which is the UK arm of the international network Baker Tilly, said it planned to float on London’s junior market Aim in the coming weeks to raise money for technology investments such as AI and the company’s expansion. It employs 43,515 people in 143 territories and made worldwide revenues of $5.6bn last year.
MHA also said it is looking at buying up other Baker Tilly firms.
Today, the firm said:
“MHA is committed to audit quality and we will be co-operating fully with the FRC as part of this investigation.”
Oil is pushing higher, with Brent crude is now up 1.5% today at $72.10 per barrel.
Escalating geopolitical tensions are pushing oil higher, while fears of trade wars are dampening energy prices:
Paul Donovan, chief economist at UBS Global Wealth Management, says:
Israel’s overnight attacks on Gaza have contributed to a slightly higher oil price, but markets are not likely to react strongly. Energy supply seems unlikely to be disrupted, and investors are more likely to focus on the growth narrative and demand.
Back in Germany, investor morale improved more than expected in March.
The ZEW economic research institute’s monthly economic sentiment index has jumped to 51.6 points this month, up from 26.0 points in February.
That’s an indication that Friedrich Merz’s push to increase borrowing and spending is being welcomed by companies across Germany’s economy.
Elsewhere in the currency markets, the Russian rouble has rallied by 2.5% this morning ahead of planned talks between Donald Trump and Vladimir Putin.
The rouble has strengthened to 81.45 roubles to the dollar, the strongest level since last June.
Russian rouble up 2.5% ahead of Trump-Putin talks
The Russian rouble surged 2.5% ahead of US-Russia talks, reaching its strongest level since June 2024.
It gained 28% this year and strengthened against the yuan.
A stronger rouble may ease inflation by lowering import costs. pic.twitter.com/ebrHcUV84r— Chris Wealth Management Pvt Ltd (@chriswealthman1) March 18, 2025
Richard Partington
Virtual reality headsets, yoga mats and men’s pool sliders have been added to the shopping basket used to calculate the cost of living in Britain, while local newspaper adverts and oven-ready gammon joints have been removed.
In a snapshot of an increasingly online, time-pressed nation, the Office for National Statistics said the annual review of its inflation basket had taken into account shifting fashion trends, as well as growing consumer appetite for faster food and future technologies.
Sales of VR headsets, which allow users to immerse themselves in digital worlds, have grown rapidly in recent years, and the goggles are used for everything from gaming to virtual therapy sessions to recreating the acid house rave scene of the 1980s and 1990s.
More here:
The euro is also rising against the US dollar this moring, ahead of a crucial vote in the German parliament about a plan to lift borrowing and spending drastically.
The vote is an important test for Germany’s next chancellor, Friedrich Merz. The plan will release a €500bn infrastructure fund and relax debt rules – currently protected by the constitution – via the outgoing parliament, where parties in favour of the proposals – his conservatives, the Social Democrats (SPD) and the Greens – have the necessary two-thirds majority.
But, Merz has faced criticism for not tying the historic levels of spending planned – as much as €1tn (£840bn) – to economic reforms.
Kit Juckes, currency expert at Société Générale, says:
There’s a lot riding on this morning’s German Bundestag vote on the fiscal package that future Chancellor Merz has put together.
With the CDU/CSU, SPD and Greens all on board and carrying a significant majority onto the vote, there is room for a few rebels to fail to support the motion, but even so, moving the proposal forwards to the Bundesrat could still help the EUR.
The result of the vote is expected around lunchtime…
Pound touches $1.30
Sterling is also having a good morning against the weakening US dollar.
The pound has traded at $1.30 for the first time since early November (just before Donald Trump’s election win sparked a dollar rally).
The dollar is generally weaker again today, due to uncertainty over trade tariffs and concerns that the US economy is weakening.
Expectations that sticky inflation will make it hard for the Bank of England to cut interest rates this year are also supporting the point, Bloomberg reports, adding:
By year-end, traders see the BOE lowering borrowing costs by 51 basis points, less than the 60 basis points expected from the Federal Reserve. The US central bank also meets this week and is forecast to keep rates at 4.5%.
The pound rose above $1.30 for the first time since November on bets interest rates in the UK will stay above those of its main peers this year. https://t.co/xxbApqmFLd
— Bloomberg (@business) March 18, 2025
[51 basis points would imply two rate cuts in the UK this year, with very little chance of a third, while 60bps implies that a third cut in the US is a possibility].
The BoE and the Fed both set interest rates later this week – neither is expected to cut, though.
