Gold prices rose in European trading on Friday, extending gains for a fifth consecutive session, continuing to smash record levels and coming very close to breaking above the psychological $5,000-per-ounce threshold for the first time in history.

The precious metal is also approaching its largest weekly gain in six years, amid strong and record safe-haven demand, supported by a weaker US dollar as geopolitical tensions escalate and confidence in US assets continues to erode.

Price Overview

• Gold prices today: Gold rose about 0.65% to $4,967.41 per ounce, marking a new all-time high, from an opening level of $4,935.76, after recording a session low of $4,930.81.

• At Thursday’s settlement, the precious metal gained about 2.25%, posting a fourth consecutive daily advance after breaking above the $4,900 level for the first time in history.

Weekly Trading

Over the course of this week, which officially concludes at today’s settlement, gold prices are up about 8% so far, on track for a third straight weekly gain and the largest weekly increase since March 2020, when the COVID-19 pandemic erupted.

US Dollar

The US dollar index has fallen by more than 1% so far this week, on track to record its worst weekly performance since last June, as the dollar bears the brunt of investor anxiety in currency markets. US assets have seen sharp declines since the start of the week amid intensifying geopolitical tensions.

As is well known, a weaker US dollar makes dollar-priced gold bullion more attractive to buyers holding other currencies.

Renewed tariff threats from US President Donald Trump against European allies have revived what is known as the “Sell America” trade, which first emerged after the so-called Liberation Day tariffs announced in April last year, when US equities, Treasury bonds, and the dollar all declined simultaneously.

Greenland Tensions

Trump said on Sunday that he would impose additional tariffs of 10% starting February 1 on imports from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom, until the United States is allowed to purchase Greenland.

Major European Union countries condemned the tariff threats linked to Greenland, describing them as blackmail, while France proposed responding with a set of unprecedented countereconomic measures.

During the World Economic Forum in Davos, Trump withdrew his threat to impose tariffs on a number of European NATO member states, announcing a framework agreement with NATO regarding control over Greenland.

Trump said on Truth Social: We have put in place a framework for a future agreement on Greenland, and we will not impose the tariffs that were scheduled to take effect on February 1.

Terry Wiseman, global foreign exchange strategist at Macquarie Group, said that while the Greenland agreement resolves the immediate issue of tariffs and invasion, it does not address the deeper underlying problem of the apparent divergence between allies.

US Interest Rates

• Justices of the US Supreme Court expressed skepticism over Trump’s unprecedented attempt to remove Federal Reserve Governor Lisa Cook, in a case that threatens the independence of the central bank.

• According to the FedWatch tool from the CME Group, markets are pricing a 95% probability that US interest rates will remain unchanged at the January 2026 meeting, with the probability of a 25-basis-point rate cut standing at 5%.

• Investors are currently pricing two US rate cuts over the course of next year, while Federal Reserve projections point to a single 25-basis-point cut.

• To reprice these expectations, investors are closely monitoring upcoming US economic data. Later today, key data will be released covering the main sectors of the US economy for January.

• The Federal Reserve is widely expected to keep interest rates unchanged at its meeting scheduled for January 27–28, despite Trump’s calls for rate cuts.

Gold Outlook

Kyle Rodda, analyst at Capital.com, said that confidence in the United States and its assets has been shaken, possibly on a lasting basis, and this is driving capital toward precious metals. He added that the term “collapse” has become widely used, and he does not believe it is an exaggeration.

On Thursday, Goldman Sachs raised its forecast for gold prices in December 2026 to $5,400 per ounce, up from a previous estimate of $4,900 per ounce.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 2.00 metric tons on Thursday, lifting total holdings to 1,079.66 metric tons.

The euro retreated in European trading on Friday against a basket of global currencies, as part of a pause after a strong rise in the previous session against the US dollar. The single currency remains on track to record its biggest weekly gain since last June, driven by escalating global geopolitical tensions surrounding Greenland.

Investors are awaiting the release of key data throughout the day on the main sectors of the European economy for January, which are expected to provide clearer signals about the future path of European Central Bank monetary policy and the direction of interest rates in the euro area.

Price Overview

• Euro exchange rate today: The euro slipped about 0.1% against the dollar to 1.1743, from an opening level of 1.1755, after recording a session high of 1.1759.

• The euro ended Thursday’s session up 0.6% against the dollar, resuming its strong gains that had paused the previous day amid correction and profit-taking from a three-week high of 1.1768.

Weekly Trading

Over the course of this week, which officially concludes at today’s settlement, the single European currency, the euro, is up about 1.3% against the US dollar so far. It is on track to record its first weekly gain in a month, and its largest weekly gain since June 2025.

Greenland Tensions

Trump said on Sunday that he would impose additional tariffs of 10% starting February 1 on imports from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom, until the United States is allowed to purchase Greenland.

Major European Union countries condemned the tariff threats linked to Greenland, describing them as blackmail, while France proposed responding with a set of unprecedented countereconomic measures.

During the World Economic Forum in Davos, Trump withdrew his threat to impose tariffs on a number of European NATO member states, announcing a framework agreement with NATO regarding control over Greenland.

Trump said on Truth Social: We have put in place a framework for a future agreement on Greenland, and we will not impose the tariffs that were scheduled to take effect on February 1.

These geopolitical shifts weighed heavily on market sentiment this week, with the US dollar bearing the brunt of investor anxiety in currency markets, as US assets saw sharp declines.

Terry Wiseman, global foreign exchange strategist at Macquarie Group, said that while the Greenland agreement resolves the immediate issue of tariffs and invasion, it does not address the deeper underlying problem of the apparent divergence between allies.

European Interest Rates

• Recent data released in Europe showed a slowdown in headline inflation during December, indicating easing inflationary pressures on the European Central Bank.

• Following these data, money markets raised pricing for a 25-basis-point European interest rate cut in February from 10% to 25%.

• Traders adjusted expectations from keeping European interest rates unchanged throughout the year to at least one rate cut of 25 basis points.

• To reprice these expectations, investors are closely watching today’s release of key data from the main sectors of the European economy for January.

Euro Outlook

At Economies.com, we expect the euro to move back into positive territory against the US dollar, especially if data from the main sectors come in stronger than currently expected by markets.

The Japanese yen retreated in Asian trading on Friday against a basket of global currencies, extending its movement in negative territory for a third consecutive session against the US dollar, after the Bank of Japan kept interest rates unchanged in line with expectations and said it is in a phase of assessing the impact of its most recent monetary tightening.

The Bank of Japan raised its economic growth and inflation forecasts for the fiscal year ending in March 2026, signaling readiness to continue tightening monetary policy and gradually increasing borrowing costs. However, markets continue to rule out an interest rate hike at the March meeting.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.25% to 158.74, from an opening level of 158.34, with the session’s low recorded at 158.32.

• The yen ended Thursday’s session down about 0.1% against the dollar, marking a second consecutive daily loss, amid easing concerns over global geopolitical tensions related to Greenland.

Weekly Trading

• Over the course of this week, which officially concludes at today’s settlement, the Japanese yen is down about 0.45% against the US dollar so far, on track for a fourth consecutive weekly loss.

• Japanese Prime Minister Sanae Takaichi called for early elections in February and pledged tax cuts, pushing Japanese government bond yields to record levels.

Bank of Japan

In line with most market expectations, the Japanese central bank on Friday kept its benchmark interest rate unchanged at 0.75%, the highest level since 1995.

The decision comes ahead of early elections that could see Prime Minister Sanae Takaichi step up calls for monetary easing and fiscal support.

The vote in favor of keeping rates unchanged passed with eight members supporting the decision, against one member who called for a 25-basis-point hike to 1.0%. The bank opted to pause temporarily to assess the impact of the most recent rate hike implemented in December 2025.

In its monetary policy statement, the Bank of Japan said it will “adjust monetary policy flexibly” if economic conditions evolve in a way that ensures a stable and sustainable achievement of its 2% inflation target.

Economic Outlook

• The Bank of Japan raised its economic growth forecast for the fiscal year ending in March 2026 to 0.9%, up from 0.7% in October 2025. It also lifted its GDP growth forecast for fiscal year 2026 to 1%, from 0.7%.

• Core inflation expectations (excluding food and energy) were revised higher for fiscal year 2026 to around 1.9%, a level very close to the bank’s 2% target.

Japanese Interest Rates

• Following the meeting, market pricing for a quarter-point rate hike by the Japanese central bank at the March meeting remained below 20%.

• To reprice these expectations, investors are awaiting further data on inflation, unemployment, and wages in Japan.

Kazuo Ueda

Later today, Bank of Japan Governor Kazuo Ueda is scheduled to speak about the outcome of the monetary policy meeting, with his remarks expected to provide additional clarity on the future path of policy normalization and interest rate hikes in Japan over the course of this year.

Inflation edged slightly further away from the Federal Reserve’s target in November, but came in line with expectations, according to the central bank’s preferred measure released on Thursday.

The Personal Consumption Expenditures (PCE) price index, published by the US Department of Commerce and used by the Federal Reserve as a key forecasting tool, showed inflation running at an annual rate of 2.8% in November, both on a headline and core basis, matching Dow Jones estimates.

The Bureau of Economic Analysis (BEA) reported that October’s annual reading stood at 2.7% for both headline and core inflation, with the core measure excluding volatile food and energy prices.

On a monthly basis, prices rose by 0.2% in both October and November. The data for the two months were released together due to disruptions caused by the US government shutdown, which temporarily halted official data collection and reporting.

Alongside the inflation figures, the report showed personal income rising by 0.1% in October and 0.3% in November, with the November increase coming in 0.1 percentage point below expectations.

Personal consumption expenditures, a key indicator of consumer spending, increased by 0.5% in both months, in line with forecasts for November.

The personal saving rate rose to 3.5% in November, down 0.2 percentage point from the previous month.

November price data showed a 0.2% increase in both goods and services prices. Food prices were unchanged, while energy costs climbed 1.9% after falling 0.7% in October.

The report was released on the same day the Bureau of Economic Analysis said gross domestic product grew at an annualized rate of 4.4% in the third quarter, according to the second and final estimate. Separately, the US Department of Labor reported that weekly jobless claims are trending toward their lowest levels in nearly two years.

Taken together, the data suggest the US economy continues to expand, with consumer spending still outpacing inflation, despite some cooling in the labor market.

Markets expect the Federal Reserve to leave interest rates unchanged at its policy meeting next week, following three consecutive rate cuts in 2025.

Futures traders currently see no more than two rate cuts this year, as policymakers assess the impact of last year’s monetary easing alongside persistent inflation pressures and ongoing geopolitical uncertainty.