Gold prices fell in the European market on Thursday, moving away from all-time highs, as correction and profit-taking activity intensified, in addition to pressure from the stronger US dollar in the foreign exchange market.

Weak US producer price data boosted expectations of a Federal Reserve rate cut next week. For further clarity, investors are awaiting consumer price data later today, considered the main gauge of US inflation.

Price Overview

• Gold prices today: Gold fell by 0.5% to ($3,621.62), from the opening level at ($3,640.59), recording the highest at ($3,649.21).

• At Wednesday’s settlement, gold prices rose by 0.4%, resuming gains that had paused the day before amid correction and profit-taking from the all-time high of $3,674.80 per ounce.

US Dollar

The dollar index rose by about 0.2% on Thursday, extending gains for the third consecutive session, reflecting the continued advance of the US currency against a basket of major and minor counterparts.

As we know, the stronger US dollar makes dollar-priced bullion less attractive to buyers holding other currencies.

US Interest Rates

• US producer price data for August came in weaker than market forecasts on an annual basis and unexpectedly contracted on a monthly basis, signaling a potential slowdown in consumer prices during September.

• According to the CME FedWatch tool: the probability of a 25-basis-point rate cut in September is currently priced at 100%, with an 8% chance of a 50-basis-point cut.

• The probability of a 25-basis-point cut in October is also fully priced at 100%, with a 6% chance of a 50-basis-point cut.

US Inflation Data

To reaffirm these odds, traders are awaiting key US inflation data for August later today, which are expected to heavily influence the Fed’s policy path.

At 12:30 GMT, the headline consumer price index (CPI) will be released, expected to rise by 2.9% year-on-year in August from 2.7% in July. Core CPI is expected to increase by 3.1% year-on-year, unchanged from the previous reading.

Gold Outlook

• Ilya Spivak, financial markets strategist, said: “Gold appears to be holding on to recent gains as markets await the US CPI report and its impact on Fed rate cut expectations.”

• Spivak added: “The current trend for gold prices points upward, but a strong CPI report could strengthen the dollar and hurt gold in the short term, pushing it lower.”

• He explained: “Losses may be limited, as markets are unlikely to abandon their rate-cut bets even if easing is delayed somewhat.”

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 0.28 metric tons yesterday, bringing the total to 979.96 metric tons, rebounding from 979.68 metric tons, the lowest since August 29.

The euro rose at the opening of the European market on Thursday against a basket of global currencies, resuming gains after two days of losses against the US dollar, moving toward a seven-week high. However, the rise remains limited amid ongoing geopolitical tensions in Eastern Europe.

Ahead of the European Central Bank’s monetary policy decisions later today, interest rates are widely expected to remain unchanged for the second consecutive meeting.

Global financial markets are awaiting signals from the ECB on the possibility of resuming the monetary easing cycle during the remainder of this year.

Price Overview

• Exchange rate of the euro today: The euro rose against the US dollar by 0.1% to ($1.1707), from today’s opening price at ($1.1695), recording the lowest at ($1.1693).

• The euro ended Wednesday’s trading down by 0.1% against the US dollar, marking a second consecutive daily loss, as correction and profit-taking continued from the seven-week high of $1.1780.

Geopolitical Tensions

As geopolitical tensions escalated on Europe’s eastern front, Poland announced on Wednesday that it intercepted and shot down Russian drones suspected of violating its airspace, with support from NATO aircraft.

This incident marks a significant precedent, as it is the first time a NATO member state has announced the direct use of military force since the outbreak of the Russia-Ukraine war, highlighting the seriousness of the situation and the risk of conflict expansion.

European Central Bank

The European Central Bank concludes later today its sixth monetary policy meeting of 2025, with expectations of maintaining a pause in rate cuts. The awaited statement is expected to provide further signals and clarifications about the future path of interest rates for the remainder of this year.

Expectations are currently stable for the ECB to keep interest rates unchanged at the 2.15% range, the lowest level since October 2022, for the second consecutive meeting.

The ECB interest rate decision and policy statement are due at 12:15 GMT, followed by a press conference with ECB President Christine Lagarde at 12:45 GMT.

Euro Outlook

At Economies.com, we expect: If the ECB’s comments turn out more hawkish than markets anticipate, the odds of an interest rate cut before year-end will decline, leading to further gains in the euro against a basket of global currencies.

The Australian dollar rose in the Asian market on Thursday against a basket of global currencies, maintaining gains for the second consecutive day against its US counterpart, trading near the ten-month high recorded in earlier dealings yesterday. This rise came on the back of higher commodity and base metal prices in global markets.

The Australian dollar’s gains were also supported by renewed inflationary pressures on policymakers at the Reserve Bank of Australia, which led to a decline in the odds of an interest rate cut in September.

Price Overview

• Exchange rate of the Australian dollar today: The Australian dollar rose against the US dollar by about 0.15% to (0.6621), from today’s opening price at (0.6613), recording the lowest level at (0.6608).

• On Wednesday, the Australian dollar gained 0.45% against the US dollar, its third gain in the last four days, recording a ten-month high at 66.36 cents, amid strong buying of the Australian currency.

Global Commodity Prices

Global commodity and metals prices have recently witnessed a strong wave of gains, driven by rising demand from major economies, particularly China and the United States, in addition to geopolitical tensions that have reinforced investors’ shift toward basic commodities as a safe haven.

This rise reflects positively on the Australian economy, which is one of the world’s largest exporters of iron ore, coal, and gold. It contributes to strengthening the trade surplus and boosting revenues for companies operating in the mining sector.

It also provides strong support for the government’s budget through higher tariff and tax revenues, giving the Australian economy greater flexibility to withstand global inflationary pressures and maintain stable growth rates.

Australian Interest Rates

• Recent data from Sydney showed inflation in the country rising to its highest level in a year, renewing inflationary pressures on policymakers at the Reserve Bank of Australia.

• Following the above inflation data, market pricing of a 25-basis-point interest rate cut by the Reserve Bank of Australia in September fell from 30% to 22%.

• To reprice those odds, investors are awaiting further data on inflation, unemployment, and wages in Australia ahead of the upcoming September 30 meeting.

Asset prices reflected an optimistic mood on Wednesday, as Bitcoin (BTC) regained the $112,000 level, trading at $112,366.98, while European stocks opened higher, with analysts increasingly emphasizing that the odds of recession or stagflation raised by the shocking US jobs data are receding.

The US Bureau of Labor Statistics (BLS) published a striking update on Tuesday, showing that the economy likely added 911,000 fewer jobs than previously reported over the 12 months through March 2025.

For much of last year, equity and crypto investors bet that a strong labor market would keep the economy on track despite persistent inflation. That optimism was shaken on Tuesday, as Bitcoin quickly dropped from $113,000 to $110,800.

Some market participants viewed the BLS revision as evidence of an imminent recession, but Michael Englund, Chief Economist at Action Economics, said the data revealed little about the business cycle or the health of the economy.

Englund wrote in an email to CoinDesk: “These revisions tell us more about the structural path of the US labor force than about where we are in the business cycle. They did not raise our assessment of recession risks, even if they indicate that the long-term trend for monthly job growth has shifted from hundreds of thousands into the tens of thousands. We now assume structural labor force growth of 90,000 jobs per month, compared with 150,000–200,000 jobs during most of the current expansion.”

He explained that the sharp post-COVID growth in the US labor force, which exceeded economists’ expectations, was driven largely by net annual immigration of about one million people. But the trend has now reversed into negative net migration estimated between one and two million people.

Englund added: “This shift toward a lower and more stable labor force growth path means slower growth in civilian employment as measured by household surveys or nonfarm payrolls.”

Financial markets appear to be adopting this view, as European equities opened higher today while Bitcoin regained the $112,000 level. Alternative tokens such as Ether (ETH), Ripple (XRP $2.9722), and Dogecoin (DOGE $0.2401) also recovered much of Tuesday’s losses. Solana (SOL) surged to $222, its highest since February 1. S&P 500 futures traded 0.3% higher, and European equities posted early-session gains.

Stagflation Fears “Overdone”

The BLS revisions and upcoming US consumer price index (CPI) data, expected to show inflation holding near 3% (well above the Fed’s 2% target), reignited discussion of stagflation — the mix of high inflation, high unemployment, and weak growth that is considered the worst scenario for high-risk assets like Bitcoin.

But those fears look overstated, according to Marc Chandler, Managing Partner and Chief Market Strategist at Bannockburn Global Forex, who noted that US GDP is still growing above the Fed’s estimates for the “non-inflationary path.”

Chandler told CoinDesk: “I think stagflation talk remains exaggerated. The Atlanta Fed GDP tracker is still showing growth well above the Fed’s non-inflationary path.”

He added: “Yes, inflation is a bit high and may rise with Thursday’s CPI data, but Fed officials like Waller and Bowman want to look through tariff-related increases. It seems clear to me the Fed will resume easing next week.”

Traders are now pricing a 91% chance of a 25-basis-point Fed rate cut to 4% at the September 17 meeting, according to the CME FedWatch tool. Some investment banks and market participants are also expecting a larger 50-basis-point cut.

Focus on US CPI Data

Easing expectations may strengthen if Wednesday’s producer price index (PPI) and Thursday’s consumer price index (CPI) show surprise signs of cooling inflation, supporting high-risk assets at elevated levels in the near term.

But these elevated expectations could set markets up for disappointment.

Greg Magadini, Director of Derivatives at Amberdata, said: “I think this week’s CPI data will give us more context… If markets expect a 50-basis-point cut but the Fed delivers only 25 at the September 17 meeting, we’ll see broad-based selling.”