Gold prices rose in European trade on Thursday, resuming gains and moving once again towards record highs. 

The current slowdown in US 10-year treasury yields provided support for non-yielding gold futures, while haven demand underpinned the precious metal as well. 

Prices

Gold prices rose 0.85% to $2381 an ounce, with a session-low at $2370.

Prices lost 0.9% on Wednesday, the second loss in a row on profit-taking off record highs at $2431. 

US Yields 

US 10-year treasury yields fell 0.65% away from recent five-month highs at 4.696%, underpinning non-yielding assets. 

The developments come as markets await more clues on the future of US interest rates this year. 

Fed officials are now more cautious about discussing the timing of the first interest rate cut, with Fed Chair Jerome Powell hinting this week that interest rates could remain high for longer than expected. 

US Rates

The odds of a Federal Reserve interest rate cut in June fell to 15%, while the odds of such a cut in July fell to 41%. 

Now traders await barely two 0.25% interest rate cuts this year by the Fed instead of three rate cuts as previously expected. 

 The SPDR

Gold holdings at the SPDR Gold Trust fell 2.59 tonnes yesterday to a total of 827.59 tonnes, the lowest in a week. 

Euro rose in European trade on Thursday against a basket of major rivals, extending gains for the second day against the dollar and approaching one-week highs amid a strong risk appetite in the market.

The common currency is trying to recover from recent five-month lows, trading above $1.07 once more. 

However negative pressures remain, with the ECB likely to start cutting interest rates soon as inflation approaches 2%. 

The Price

EUR/USD rose 0.2% to $1.0690, with a session-low at $1.0664, after rising 0.5% on Wednesday, the first profit in seven days away from five-month lows at $1.0601. 

Positive Outlook

Global markets are dominated by a wave of surging risk sentiment, as US treasury yields slow down, while concerns about a wide-scale Iran-Israel conflict fade.

Interest Rate Gap 

The current European-US interest rate gap stands at 100 basis points, the lowest since May 2022, and is expected to widen to 125 basis points in June.

Negative Pressures 

City Index’s analysts have noted the increased pressures on the euro amid expectations of ECB interest rate cuts in the summer, while the Federal Reserve is likely to hold off such a move. 

Most cryptocurrencies declined on Wednesday as risk appetite took a hit following remarks by Fed Cair Jerome Powell. 

Fed Chair Jerome Powell said in a symposium earlier this week that inflation has stiffened and held its place during the first quarter, raising doubts about the prospects of interest rate cuts in 2024.

Powell added that it’s clear that recent inflation data didn’t give the Fed enough confidence that inflation is heading towards the target, and it could take longer than expected.

He said recent data showed strong economic growth and labor momentum, but little progress in bringing inflation towards 2%. 

Ethereum 

Ethereum fell 2.8% as of 21:18 GMT on the CoinMarketCap platform to $3009. 

Gold prices fell on Wednesday even as the dollar lost ground against most major rivals, with investors taking a breath and collecting profits after a string of record highs.

Fed Chair Jerome Powell said in a symposium earlier this week that inflation has stiffened and held its place during the first quarter, raising doubts about the prospects of interest rate cuts in 2024.

Powell added that it’s clear that recent inflation data didn’t give the Fed enough confidence that inflation is heading towards the target, and it could take longer than expected.

He said recent data showed strong economic growth and labor momentum, but little progress in bringing inflation towards 2%. 

Separately, the International Monetary Fund raised its global growth forecast by 0.1% to 3.2%, while expecting the US economy to grow by 2.7% this year. 

The IMF expects the US to register an annual growth rate of 2.7%, up from 0.6% in latest forecasts. 

Otherwise, the dollar index fell 0.3% as of 18:14 GMT to 105.8, with a session-high at 106.4, and a low at 105.8. 

Gold spot prices fell 0.6% as of 18:15 GMT, or $14.60 to $2393 an ounce, after surpassing $2400 for the first time ever yesterday.