Editor’s Note
This article highlights a notable trend in the UK retail sector: robust consumer demand for gold and silver jewelry despite record-high precious metal prices. The data suggests a complex market where consumer spending on certain luxury goods remains resilient even amid broader economic pressures.
There was strong demand for gold and silver jewelry last month, even as both metals saw their prices rise rapidly. The ONS said that 2025 saw a second consecutive increase in retail sales volumes, although volumes remain below their pre-pandemic highs.
European stock market futures are lower as we reach the last trading day of the week. Stocks staged an impressive rebound on Thursday after Donald Trump withdrew his threat of tariffs on European allies; however, the UK index lagged in the recovery, as it was dragged down by weaker oil prices, which weighed on major oil companies, and a massive sell-off in defense names.
FTSE 100 futures point to a slightly weaker opening later this morning, although US stock futures remain in positive territory, even after Intel’s stock price fell sharply after reporting weaker-than-expected first-quarter guidance, and JP Morgan could also see weakness in the stock market later today after Donald Trump said he would sue the bank for $5 billion.
Demand for risk assets remains robust, even if investors must navigate complicated geopolitical waters. Asian stocks rose to new records today and are on track to outperform US and European stocks this week.
Asian stocks have been in demand all year; however, the deterioration of diplomatic relations between the US and Europe could attract more flows to Asia. Furthermore, the Japanese bond market has mostly recovered from the massive sell-off earlier this week, and Japan’s 30-year yields have risen only 2.2 basis points overall this week.
This has weighed on the yen, even though the BOJ also raised its inflation forecasts for this year, which has increased the probability of an April rate hike to 56% from 20% earlier this week. However, the currency market is focused on Ueda’s comments that the BOJ could intervene in the bond market under exceptional circumstances, and the yen is the weakest currency in the G10 currency space on Friday, closing a bad week in which USD/JPY has risen 0.5%.
The pound has managed to ignore fears that Kier Starmer could be replaced as prime minister by Andy Burnham. There were concerns that he would stand as an MP, which would be a way to get to 10 Downing Street. However, this was not met with enthusiasm by other Labour ministers on Thursday. Although Burnham says he will not be “tied to the bond markets,” it seems other Labour ministers are, and they do not want a financial crisis under their watch. Thus, although UK yields remain high after yesterday’s jump, there is still no clear consensus for Burnham to replace Starmer, which could limit any selling in the UK bond market this morning.
Commodities are also in the spotlight this morning. The weak dollar is helping to push gold to a new all-time high. The price of gold has risen more than 7% this week and has increased $20 so far on Friday. There is no stopping the gold price at the moment, as the $5,000 per ounce level approaches. Investors may be willing to buy stocks in this environment, but geopolitical risk and an unconventional US president keep demand for the yellow metal alive as we move through January.