The dollar fell sharply on Thursday – and gold rose – as a surprise deterioration in the US trade balance undermined a key prop for the US currency and economic growth.

The figures, which showed the trade deficit widening to $57.2bn in October in spite of lower fuel prices, came as analysts increased sharply their estimate of the pace of economic contraction in the US this quarter. Macroeconomic Advisers, a consultancy firm, estimated that the US is on track for an annualised decline of 6.6 per cent.