The UK’s annual headline consumer price index rose 3.6% in October, slightly above market expectations of 3.5% and down from the previous reading of 3.8%.

Core CPI increased 3.4% year-on-year, in line with expectations and below the prior reading of 3.5%.

The data indicate easing underlying inflation pressures for Bank of England policymakers and strengthen the case for a potential interest-rate cut in December.

Gold prices rose in European trading on Wednesday, extending their recovery for a second session from a two-week low, supported by safe-haven buying amid a broad selloff across global equities.

Gains were capped, however, by a stronger U.S. dollar, which continued to benefit from hawkish commentary by several Federal Reserve officials — remarks that have pushed down expectations of a December interest-rate cut.

To reassess those expectations, investors are awaiting the release of the Fed’s latest policy-meeting minutes later today, which are expected to offer additional clarity on the future path of U.S. interest rates.

Price Overview

Gold prices rose about 0.8% to 4,098.69 dollars an ounce, up from the session’s opening level of 4,067.19 dollars, after hitting an intraday low of 4,055.72 dollars.

On Tuesday, gold gained 0.55%, its first rise in four sessions, after briefly touching a two-week low of 3,998.04 dollars earlier in the day.

Global Equities

Global stock markets have been under intense pressure this week, with the S&P 500 logging four straight days of losses amid mounting concerns over AI-stock valuations.

U.S. Dollar

The dollar index rose 0.1% on Wednesday, marking a fourth consecutive gain and reaching its highest level in a week, reflecting continued strength in the U.S. currency against major and minor peers.

As always, a stronger dollar makes dollar-priced bullion less attractive to holders of other currencies.

This rise comes as investors favor the dollar as the most attractive asset at the moment, amid growing skepticism that the Fed will cut rates in December — particularly after a wave of hawkish commentary from policymakers.

U.S. Interest Rates

Fed Vice Chair Philip Jefferson said Monday that the central bank needs to “proceed slowly” with further rate cuts.

According to CME’s FedWatch tool, market pricing for a 25-basis-point cut in December is steady at around 47%, while the probability of no change remains at 53%.

Investors will closely monitor the Fed minutes set for release later today to reassess these expectations.

Gold Outlook

Tim Waterer, chief market analyst at KCM Trade, said gold’s momentum has been somewhat constrained by the strong U.S. dollar and uncertainty over the timing of the next Fed rate cut.

He added that a wave of risk aversion in broader markets has kept gold in investor focus as a safe haven, helping limit downside moves.

SPDR

Holdings in the SPDR Gold Trust, the world’s largest gold-backed ETF, were unchanged on Tuesday, holding at 1,041.43 metric tons — the lowest level since November 6.

The British pound fell in European trading on Wednesday against a basket of global currencies, extending its losses for a fourth consecutive session against the U.S. dollar, as the greenback strengthened ahead of the release of the Federal Reserve’s latest meeting minutes, which are expected to shed new light on the likelihood of a rate cut in December.

Following bleak U.K. labor-market and growth data, expectations for a Bank of England rate cut in December have risen. Investors are now awaiting October inflation data, due later today, to reassess those probabilities.

Price Overview

The pound fell around 0.2% against the dollar to 1.3129 dollars, down from its opening level of 1.3150 dollars, after hitting an intraday high of 1.3151 dollars.

Sterling lost about 0.1% against the dollar on Tuesday, marking its third straight daily decline, as investors focused on buying the U.S. dollar as the best available return in the FX market.

U.S. Dollar

The dollar index rose 0.1% on Wednesday, extending gains for a fourth straight session to reach a one-week high, reflecting continued strength in the U.S. currency against major and minor peers.

Investors will closely examine today’s Fed minutes, which are expected to provide new clues on the December rate decision.

Hawkish remarks from several Fed officials last week pushed down the probability of a 25-basis-point cut in December from 67% to about 47%.

President Donald Trump renewed his criticism of Fed Chair Jerome Powell on Tuesday, saying: “I’d really like to remove the guy who’s there now… but someone is blocking me.” Powell’s term ends in May.

U.S. Treasury Secretary Scott Bessent said Tuesday that Trump will meet the final shortlist of candidates for Fed Chair after the Thanksgiving holiday and may announce his pick before Christmas.

U.K. Interest Rates

Recent data showed rising unemployment and weak economic growth in the U.K. during the third quarter, easing pressure on the Bank of England to maintain its restrictive stance.

Following the data, market pricing for a 25-basis-point BoE rate cut in December rose from 60% to 75%.

U.K. Inflation Data

To reprice rate expectations, investors are awaiting key October inflation figures due later today.

At 07:00 GMT, headline CPI is expected to rise 3.5% year-on-year in October, down from 3.8% in September. Core CPI is expected at 3.4% versus 3.5% the previous month.

Pound Outlook

At Economies.com, we expect that if U.K. inflation data comes in below market forecasts, the probability of a December BoE rate cut will rise further, adding additional downward pressure on the British pound.

The Japanese yen rose in Asian trading on Wednesday against a basket of major and minor currencies, as it attempted to recover from its nine-month low against the U.S. dollar. The currency is heading toward its first gain in four sessions, supported by increased buying at lower levels and renewed demand for safe-haven assets amid a global equities selloff.

Following the first official meeting between newly appointed Prime Minister Sanae Takaichi and Bank of Japan Governor Kazuo Ueda, the two sides signaled initial alignment on the need to achieve sustainable economic growth and stable prices.

Price Overview

The dollar fell about 0.15% against the yen to 155.21 yen, down from the opening price of 155.45 yen, after hitting a high of 155.59 yen earlier in the session.

The yen ended Tuesday’s trading down 0.2% against the dollar, its third consecutive daily loss, after touching a nine-month low of 155.73 yen amid continued hawkish comments from Federal Reserve officials.

Global Equities

Global stock markets have come under heavy pressure this week, with the S&P 500 posting four straight days of losses due to mounting concerns over lofty valuations in artificial-intelligence-linked stocks.

Adding to market anxiety, Tuesday’s initial jobless-claims data showed a sharp rise in the number of Americans receiving unemployment benefits between mid-September and mid-October.

Takaichi–Ueda

The first meeting between Japan’s Prime Minister Sanae Takaichi and BoJ Governor Kazuo Ueda offered several important signals for markets. Ueda stressed that the central bank will maintain its gradual approach to policy normalization, relying entirely on economic data before making any decision on interest-rate hikes.

He also noted that the relationship between wage growth and inflation is beginning to rebalance, supporting the case for policy adjustments without shocking the economy.

Takaichi expressed understanding of the BoJ’s stance and emphasized the importance of close cooperation between the government and the central bank to ensure sustainable growth and price stability.

Both sides also discussed the impact of recent yen fluctuations, underscoring the need for close monitoring to ensure the currency remains in a range consistent with economic fundamentals.

This meeting represents an important step in shaping Japan’s next phase of monetary policy, with markets highly sensitive to any signals regarding interest rates or currency movements.

Views and Analysis

Keisuke Tsuruta, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said delaying BoJ rate hikes could lead to further yen weakness and higher import costs—running counter to Takaichi’s goal of boosting real wages.

Japanese Interest Rates

Market pricing for a 25-basis-point rate hike by the Bank of Japan in December currently stands around 35%.

Investors are awaiting additional data on inflation, unemployment, and wage trends in Japan to reassess these expectations.