Gold prices fell in European trading on Monday, retreating from a two-week high reached earlier in the Asian session. The decline came amid profit-taking and a rebound in US dollar strength across currency markets.

Weaker-than-expected US jobs data has increased the likelihood of a Federal Reserve rate cut in September. Investors now await further economic releases and commentary from Fed policymakers to reassess those expectations.

Price Overview

•Gold prices dropped 0.55% to $3,345.14, down from the session’s opening at $3,363.34. The day’s high reached $3,366.15 — the strongest level since July 25.

•On Friday, gold gained 2.2%, its second consecutive daily rise and the biggest single-day gain since June 2, as prices recovered from a four-week low at $3,268.89.

•Beyond bargain buying, Friday’s gains were driven by weak US labor market data and renewed trade tariff concerns involving Trump’s administration.

US Dollar

The US Dollar Index rose 0.3% on Monday, attempting to recover from Friday’s steep losses and reflecting renewed demand for the greenback against a basket of major currencies.

The rebound comes as markets await stronger evidence supporting or refuting the likelihood of a Fed rate cut in September, especially amid continued comments from Fed officials.

US Interest Rate Outlook

•US job growth slowed more than expected in July, with non-farm payrolls rising by 73,000, following a downwardly revised 14,000 increase in June.

•According to CME’s FedWatch tool, the probability of a 25-basis-point rate cut in September rose from 43% to 75%, while the odds of rates staying unchanged dropped from 57% to 25%.

•Expectations for a 25-basis-point cut in October also climbed — from 64% to 95% — while the odds of holding rates steady dropped from 36% to just 5%.

•Following the disappointing jobs data, traders are now pricing in roughly 63 basis points of Fed easing by December, up from 35 basis points previously.

Gold Market Outlook

Tim Waterer, Chief Market Analyst at KCM Trade, stated: “Gold has seen a soft start to the week after Friday’s rally. A mix of profit-taking and dollar stabilization has caused a slight dip in prices at the beginning of the week.”

SPDR Gold Trust Holdings

SPDR Gold Trust — the world’s largest gold-backed ETF — saw holdings decline by 1.43 metric tons on Friday, marking the third consecutive daily drop. Total holdings fell to 953.08 metric tons, their lowest level since July 21.

The euro declined in European trading on Monday against a basket of global currencies, as part of a corrective pullback after Friday’s sharp rally. The single currency gave up a two-week high versus the US dollar due to profit-taking and technical selling.

European inflation figures for July came in hotter than expected, reinforcing inflationary pressures on European Central Bank policymakers and reducing the likelihood of a rate cut in September.

Price Overview

•EUR/USD fell by 0.35% to $1.1550, down from the opening price of $1.1589. The pair recorded a session high of $1.1597 — the highest level since July 28.

•On Friday, the euro surged 1.5% against the dollar, marking its second straight daily gain and its strongest one-day performance since April 10, as it continued to recover from a two-month low of $1.1400.

•In addition to bargain buying at lower levels, Friday’s gains were driven by better-than-expected eurozone inflation data and downbeat US labor market figures.

US Dollar

The US Dollar Index rose by 0.3% on Monday, attempting to recover from Friday’s steep losses, reflecting renewed demand for the greenback against a basket of major currencies.

This rebound comes as markets await further confirmation regarding the likelihood of a Federal Reserve rate cut in September, particularly in light of ongoing remarks from Fed officials.

European Interest Rates

•Eurozone consumer prices rose by 2.0% in July, beating market expectations of a 1.9% increase and matching the previous month’s 2.0% reading.

•The data indicates persistent inflationary pressure on ECB policymakers.

•According to Reuters sources, a clear majority of ECB members favored keeping interest rates unchanged at the upcoming September meeting — for a second consecutive time.

•Market pricing for a 25-basis-point ECB rate cut in September remains below 30%.

•Investors will closely monitor upcoming eurozone data and ECB commentary to reassess those odds.

The Japanese yen declined in Asian trading on Monday against a basket of major and minor currencies, retreating from a two-week high versus the US dollar. The drop came amid profit-taking and a rebound in the greenback’s strength across the forex market.

Last week’s Bank of Japan meeting paved the way for further normalization of monetary policy. However, uncertainty remains over whether interest rates will be raised in September, prompting investors to await stronger evidence regarding the central bank’s policy path for the remainder of the year.

Price Overview

•USD/JPY rose by 0.35% to ¥147.91, up from the opening price of ¥147.38, after recording a session low of ¥147.05.

•On Friday, the yen jumped 2.2% against the dollar, marking its biggest daily gain since April 10 and its first advance in three sessions, as it rebounded from a four-month low of ¥150.92.

•Aside from buying interest at lower levels, the yen strengthened sharply after Japanese authorities voiced concern over excessive currency movements, coupled with weak US job data.

•As a result, the yen ended last week with a 0.2% gain against the dollar, posting its second consecutive weekly advance.

US Dollar

The US Dollar Index rose 0.3% on Monday, attempting to recover from Friday’s sharp losses, reflecting a rebound in dollar demand against a basket of global currencies.

This rebound comes as markets await more concrete signals on the likelihood of a US rate cut in September, especially in light of comments from several Federal Reserve officials.

Japanese Interest Rates

•The Bank of Japan last week signaled the possibility of resuming interest rate hikes, citing the persistent rise in food prices as a broad inflationary risk.

•The central bank confirmed it would raise rates if economic and price conditions align with its outlook.

•BoJ Governor Kazuo Ueda described the recent US-Japan trade agreement as a major step toward enhancing economic stability by reducing long-standing uncertainty that had weighed on future expectations.

•Market pricing for a 25-basis-point rate hike by the BoJ in its September meeting remains around 50%.

•Investors are now watching upcoming data on inflation, unemployment, and wage growth in Japan to reassess the outlook.

Ethereum prices declined sharply on Friday amid widespread sell-offs across most cryptocurrencies, as global risk appetite weakened following disappointing employment data from the United States.

Government data showed the US economy added only 73,000 jobs in July, well below expectations of a 100,000-job increase.

Figures for May and June were also revised down sharply, showing a combined downward adjustment of 258,000 jobs from initial estimates. June’s figure was revised to just 14,000 from 147,000, while May’s was cut to 19,000 from a previously reported 144,000.

The unemployment rate rose to 4.2% in July from 4.1%, in line with market forecasts.

Separately, a monthly survey by the University of Michigan showed the final July reading of US consumer sentiment rose to 61.7, up from 60.7 in June and slightly below the preliminary reading of 61.8. However, it remained well below the July 2024 level of 66.4.

In another sign of weakening economic momentum, the Institute for Supply Management reported that its Manufacturing PMI fell by one point to 48 in July.

Amid the soft data, President Donald Trump questioned the legitimacy of the weak jobs figures, accusing official agencies of manipulating the numbers for political reasons.

As a result of the weak labor report, expectations for a 25-basis-point interest rate cut by the Federal Reserve at its September meeting have increased. This comes after the Fed decided on Wednesday to keep its benchmark rate unchanged in the 4.25%–4.50% range.

Adding further pressure to global markets, President Trump announced earlier in the day a new round of tariff hikes on dozens of countries, intensifying fears of an escalating trade war.

Ethereum

As of 21:04 GMT, Ethereum was down 5.7% on CoinMarketCap, trading at $3,523.8.