Gold prices rose in the European market on Wednesday, resuming gains that were temporarily interrupted yesterday, and moved higher toward a two-month high, supported by increased buying of the metal as one of the best alternative opportunities, as weak inflation data continue to emerge across major economies, boosting expectations of continued global interest rate cuts.

Those gains were capped by the US dollar entering a short-term recovery cycle from two-and-a-half-month lows, as markets await the release of key US inflation data on Thursday.

Price Overview

• Gold prices today: Gold rose by about 0.95% to $4,342.54, from an opening level of $4,302.57, and recorded a low of $4,301.63.

• At Tuesday’s settlement, gold prices fell by 0.1%, marking the first loss in six sessions, amid correction and profit-taking operations from a two-month high at $4,353.59 per ounce.

Global Interest Rates

Weak inflation data continue to emerge across major economies, with Canadian inflation coming in below market expectations and UK inflation falling to its lowest level in eight months, highlighting a continued easing of inflationary pressures on major global central banks, and reinforcing expectations that these banks will continue cutting interest rates in 2026.

The Bank of England is set on Thursday to cut UK interest rates by 25 basis points to a range of 3.75%, the lowest level since December 2022, in the fourth easing step this year.

The US Dollar

The dollar index rose on Wednesday by around 0.45%, as part of a recovery from a two-and-a-half-month low, on track to post its first gain in three sessions, reflecting a broad rebound in the US currency against a basket of global currencies.

Beyond buying from low levels, the recovery in the US dollar comes amid easing inflationary pressures on major global central banks, in addition to the rise in the US unemployment rate, which reinforces expectations of interest rate cuts by the Federal Reserve in 2026.

US Interest Rates

• According to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the January 2026 meeting currently stands at 78%, while pricing for a 25-basis-point rate cut stands at 22%.

• Investors are currently pricing in two US interest rate cuts over the course of next year, while Federal Reserve projections point to one cut of 25 basis points.

• To reprice these probabilities, investors are closely monitoring the release of further US economic data, along with comments from Federal Reserve officials.

• Key US inflation data for November will be released on Thursday, providing further strong evidence on the path of US monetary policy in 2026.

Gold Outlook

Bob Haberkorn, senior market strategist at RJO Futures, said that US labor market data give the Federal Reserve more reasons to cut interest rates, and if rates are cut, this would be a positive signal for gold — this is how the market is currently interpreting it.

SPDR

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Tuesday, keeping the total at 1,051.69 metric tons.

The British pound fell in the European market on Wednesday against a basket of global currencies, retreating from a two-month high against the US dollar, amid corrective moves and profit-taking, alongside attempts by the US currency to recover from low levels.

The pullback comes as investors refrain from building new long positions ahead of the release of key UK inflation data, which are expected to play a decisive role in shaping the Bank of England’s policy decision due on Thursday.

Current expectations point to a 25 basis point cut in UK interest rates to a range of 3.75%, the lowest level since December 2022, marking the fourth monetary easing step this year.

Price overview

• British pound exchange rate today: The pound fell against the dollar by 0.3% to 1.3380, from an opening level of 1.3423, while recording a session high at 1.3427.

• On Tuesday, the pound gained around 0.35% against the dollar, posting a second consecutive daily gain and reaching a two-month high at 1.3456, supported by strong UK economic data on wage growth and industrial and commercial activity.

US dollar

The dollar index rose by more than 0.2% on Wednesday, rebounding from a two-and-a-half-month low and heading toward its first gain in three sessions, reflecting a recovery in the US currency against a basket of global currencies.

Beyond bargain buying from low levels, the dollar’s rebound comes ahead of the release of further key US economic data, which are expected to provide clearer signals on the Federal Reserve’s interest rate path in 2026.

UK interest rates

• The Bank of England meets on Thursday to discuss the appropriate monetary policy stance in light of recent economic developments in the UK, particularly as concerns over financial stability have eased following the announcement of a relatively moderate autumn budget.

• The vote to hold interest rates steady at the Bank of England’s November meeting showed a growing inclination among policymakers toward delivering a fourth monetary easing step this year.

• Market pricing for a 25 basis point cut in UK interest rates at this week’s meeting remains stable above 90%.

• Monetary updates and comments from the Bank of England governor are expected to provide strong guidance on the path of UK interest rates in 2026.

UK inflation data

In order to reprice current interest rate expectations, investors are awaiting the release of the UK’s main inflation data for November later today, which are expected to have a significant impact on the Bank of England’s policy outlook.

At 07:00 GMT, headline consumer price inflation is expected to rise by 3.5% year-on-year in November, down from 3.6% in October, while core CPI is expected to increase by 3.4% year-on-year, unchanged from the previous reading.

Outlook for the British pound

We expect here at Economies.com that if UK inflation data come in below market expectations, the case for a UK interest rate cut will be reinforced, leading to further downside pressure on the British pound’s exchange rate.

The Japanese yen fell in the Asian market on Wednesday against a basket of major and minor currencies, retreating from a two-week high against the US dollar, amid corrective moves and profit-taking, alongside attempts by the US currency to recover from recent lows.

Markets are now looking ahead to the final monetary policy meeting of the Bank of Japan for 2025, which begins on Thursday, with the policy decision due on Friday. Expectations broadly point to a 25 basis point increase in Japanese interest rates, marking the second monetary tightening step this year.

Price overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.3% to 155.15, from an opening level of 154.69, while the session low was recorded at 154.51.

• The yen ended Tuesday’s trading up 0.35% against the dollar, posting a second consecutive daily gain and touching a two-week high at 154.39, amid ongoing unwinding of yen carry trades.

US dollar

The dollar index rose by 0.2% on Wednesday, rebounding from a two-and-a-half-month low and on track for its first gain in three sessions, reflecting a recovery in the US currency against a basket of global currencies.

Beyond bargain buying from low levels, the dollar’s rebound comes as investors await further key US economic data, which are expected to provide clearer signals on the Federal Reserve’s interest rate path in 2026.

Bank of Japan

The Bank of Japan’s policy meeting begins on Thursday, as officials assess the appropriate monetary stance for the world’s fourth-largest economy, amid strong expectations of a 25 basis point rate hike to around 0.75%, the highest level since 2008 during the global financial crisis.

Markets will closely watch Governor Kazuo Ueda’s comments on the outlook for monetary policy in 2026, at a time when expectations are rising that the Japanese government may resort to additional fiscal stimulus, adding further complexity to the policy landscape facing the central bank.

Japanese interest rates

• Following recent inflation and wage data in Japan, market pricing for a quarter-point rate hike at this week’s meeting has stabilized above 90%.

• Bank of Japan Governor Kazuo Ueda has recently delivered a more optimistic assessment of the Japanese economy, stating that the central bank will weigh the pros and cons of raising interest rates at its upcoming policy meeting.

• Three government officials told Reuters that the Bank of Japan is likely to raise interest rates in December.

Views and analysis

Analysts at Societe Generale said they expect the Bank of Japan to raise interest rates to 1% by July next year, while also anticipating a rate hike at Friday’s policy decision.

Thierry Wizman, global head of foreign exchange and rates strategy at Macquarie, said the Bank of Japan’s move is a response to inflationary pressures linked to a weak yen, as well as to a new political will to address what he described as a “cost-of-living crisis” in Japan.

Wizman added that Macquarie is more constructive on the Japanese yen than on other currencies, and expects the dollar/yen pair to move toward the 146 level by the end of 2026.

In a striking transformation, the small South American country of Guyana — until recently one of the continent’s poorest nations — has entered the world’s top 10 richest countries by GDP per capita. In just one decade, Guyana has moved from its first oil discovery to producing nearly 900,000 barrels of crude oil per day from the 6.6-million-acre Stabroek Block. This achievement has come despite an unbalanced production-sharing agreement that heavily favors the ExxonMobil-led consortium controlling the oil concession, yet it has still delivered an extraordinary economic boom. However, the speed of this growth and the scale of oil income are raising concerns that Guyana may fall victim to the so-called “oil curse.”

In a recent ranking of the world’s richest countries based on 2025 GDP per capita projections adjusted for purchasing power parity, Guyana placed tenth globally, compared with 107th just a decade ago. The former British colony now ranks behind wealthy nations such as Brunei, Switzerland, and Norway, while unexpectedly surpassing the United States, the world’s second-largest economy.

Guyana’s GDP on a purchasing power parity basis has surged since oil production began in December 2019. According to International Monetary Fund data, GDP has expanded sevenfold, rising from $10.69 billion that year to a projected $75.24 billion by 2025.

This massive expansion briefly made Guyana the fastest-growing economy in the world. Between 2022 and 2024, the country — with a population of fewer than one million — recorded annual growth rates of 63.3%, 33.8%, and 43.6% respectively, the highest globally in each of those years.

Although growth has slowed in recent months, despite rising oil output following the start-up of the Yellowtail project, Guyana’s economy is still expected to expand by 10.3% in 2025, making it the world’s third-fastest-growing economy this year.

Latest government data show Guyana currently produces around 900,000 barrels per day, making it the third-largest oil producer in South America after Brazil and Venezuela. Output is expected to continue rising as Exxon develops three additional projects in the Stabroek Block — Uaru, Whiptail, and Hammerhead — alongside a fourth proposed facility known as Longtail, which is still under regulatory review.

Once these three projects come online, between 2026 and 2029, they are expected to add 650,000 barrels per day of capacity, lifting Guyana’s total potential production to around 1.5 million barrels per day.

A fourth facility is also under development but has yet to receive final approval. The Longtail project, discovered in 2018, is the fourth discovery by the Exxon-led consortium in the Stabroek Block. Unlike earlier projects, Longtail — with an estimated cost of $12.5 billion — will focus on natural gas and condensate production. The project is currently undergoing environmental assessment, with Exxon expecting a final investment decision by the end of 2026. If approved, production would begin in 2030, adding up to 1.5 billion cubic feet of natural gas per day and 290,000 barrels of condensate, pushing Guyana’s total hydrocarbon output above 1.7 million barrels per day.

As these offshore assets come onstream, oil production will further boost the former British colony’s GDP. The IMF expects Guyana’s GDP, on a purchasing power parity basis, to more than double between 2025 and 2030, rising from $75 billion to $156 billion. For a country with fewer than one million people, this equates to GDP per capita approaching $193,000. On this measure, Guyana would become the world’s second-richest country after Liechtenstein, ahead of Singapore. However, such extreme concentration of wealth from a single resource — oil — has intensified concerns over the risk of the oil curse.

The “oil curse” refers to the phenomenon in which resource-rich countries become excessively dependent on crude oil revenues, often leading to weak governance, corruption, mismanagement, democratic erosion, political instability, and ultimately internal conflict. Venezuela is a prominent example, where decades of over-reliance on oil undermined economic development, destabilized the country, and culminated in dictatorship and economic collapse.

Against this backdrop, the Stabroek Block — estimated to contain at least 11 billion barrels of recoverable oil resources — has become a focal point for Caracas. Following Exxon’s series of world-class offshore discoveries, Venezuelan President Nicolás Maduro escalated hostile rhetoric and threats in an effort to reclaim the long-disputed Essequibo region. Roughly the size of the US state of Georgia, Essequibo accounts for two-thirds of Guyana’s territory and is rich in precious metals, diamonds, copper, iron, aluminum, bauxite, and manganese.

The prolific Stabroek Block lies within Guyana’s territorial waters in the disputed Essequibo region, which Venezuela has claimed since its independence. Over the past three years, Caracas has intensified efforts to reassert control over the area, including threats of invasion. The Essequibo border has seen repeated clashes between the Guyanese military and Venezuelan criminal groups, while Venezuelan naval vessels have entered the Stabroek Block to harass and threaten floating production, storage, and offloading vessels operating there.

Concerns are growing that Guyana — a developing country with a history of corruption — lacks the governance capacity and institutional stability needed to manage the enormous wealth generated by this unprecedented oil boom. Questions are already emerging over how Georgetown is spending the massive oil revenues flowing into state coffers. The government has launched an ambitious infrastructure program, allocating $1.2 billion for public works in 2025 to fund new roads and bridges, develop a world-class deep-water port, and expand public facilities such as hospitals. Nonetheless, there are widespread fears that many Guyanese citizens are not benefiting from the economic surge.

Despite rapid growth, a large share of the population continues to live below the poverty line. Analysts estimate that up to 58% of Guyana’s population remains in poverty, although precise figures are difficult to establish due to limited official data. The World Bank estimated in 2019 that 48% of the population lived below the poverty line. Community leaders argue that oil revenues have yet to reach the poorest communities, particularly in rural areas.

These concerns are compounded by Guyana’s growing dependence on volatile global energy markets at a time when oil price prospects appear increasingly uncertain. Benchmark Brent crude prices fell 17% over the past year, directly affecting oil revenues. Analysts at major financial institutions expect Brent prices to fall to around $30 per barrel by 2027 due to global oversupply. The rapid development of Guyana’s offshore fields is unsurprisingly one of the key contributors to the sharp rise in non-OPEC global supply growth.

This will weigh heavily on Guyana’s newfound oil wealth. As global oil prices decline amid oversupply, the country’s oil revenues will shrink — a problem exacerbated by the fact that 75% of production from the Stabroek Block is classified as cost oil, meaning it is excluded from royalty and profit-sharing calculations with the state. While this may not be enough to derail the current boom in the short term, it carries significant risks of corruption, mismanagement, unbalanced development, and long-term damage to an economy that is becoming ever more dependent on oil.