Gold prices fell in European trading on Wednesday for the first time in four sessions, giving up the one-week high recorded earlier in Asian trade, amid renewed correction and profit-taking activity, and under pressure from a stronger US dollar.

A series of key US economic data releases are due later today, which are expected to provide strong clues on the future path of Federal Reserve monetary policy and US interest rates.

Price overview

• Gold prices today: Gold fell by 1.2% to $4,441.67, from an opening level of $4,494.79, after touching a session high of $4,500.45, the highest level in a week.

• At Tuesday’s settlement, the precious metal gained 1.05%, marking a third consecutive daily advance, supported by rising geopolitical tensions following the US strike in Venezuela.

US dollar

The US dollar index rose by 0.1% on Wednesday, extending gains for a second straight session and approaching a four-week high, reflecting continued strength of the US currency against a basket of major and minor currencies.

This advance comes as investors increasingly favor the dollar as one of the most attractive alternative investment assets amid elevated global geopolitical risks, and as one of the best available investment opportunities, particularly in light of a stream of weak economic data from Europe and China.

US interest rates

• Stephen Miran, a Federal Reserve governor whose term ends later this month, said on Tuesday that a sharp cut in US interest rates is needed to sustain economic growth.

• Minneapolis Federal Reserve President Neel Kashkari, a voting member of the rate-setting committee this year, said he sees a risk of a sharp rise in the unemployment rate.

• According to the CME FedWatch tool, markets are currently pricing an 84% probability that US interest rates will remain unchanged at the January 2026 meeting, versus a 16% probability of a 25-basis-point rate cut.

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

• To reassess these expectations, investors are closely watching a series of key US economic releases, including private sector employment data, job openings figures, and services sector activity.

Gold outlook

Capital.com analyst Kyle Rodda said prices are “not being driven heavily by fundamentals, as there is a lot of speculation,” noting that price action has largely been upward but remains characterized by two-way volatility. He added that the US dollar is also playing a role in pressuring prices.

SPDR Gold Trust

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by around two metric tons on Tuesday, lifting total holdings to 1,067.13 metric tons.

The euro edged slightly higher in the European market on Wednesday against a basket of global currencies, trading within a narrow range against the US dollar, as investors refrained from building new positions ahead of the release of key inflation data in Europe and very important economic data from the United States.

Despite easing price pressures in Germany during December, markets continue to rule out any retreat by the European Central Bank from current interest rate levels this year, supported by the resilience of economic activity in the euro area, which has recently delivered performance exceeding expectations.

Price overview

• Euro exchange rate today: The euro rose by around 0.15% against the dollar to 1.1703, from the day’s opening level of 1.1688, after recording a low of 1.1684.

• The euro ended Tuesday’s trading down about 0.3% against the dollar, resuming losses that had paused the previous day during a recovery from a four-week low at 1.1659.

• These losses were attributed to data showing a sharper-than-expected slowdown in inflation in Germany and France, which eased inflationary pressure on policymakers at the European Central Bank.

US dollar

The US dollar index fell by 0.1% on Wednesday, reflecting a decline in the US currency against a basket of major and secondary currencies, as investors avoided opening new long positions ahead of key economic data from the United States.

Later today, a series of US data releases are due, including private sector employment figures for December, job openings at the end of November, and the Institute for Supply Management’s survey on services sector activity in December.

These data are expected to provide further evidence on the likelihood of the Federal Reserve continuing to cut US interest rates over the course of this year.

European interest rates

• Money markets continue to price the probability of a 25 basis point cut in European interest rates in February at below 10%.

• Traders expect the European Central Bank to keep interest rates unchanged throughout this year, especially if inflation remains close to its 2% target.

Inflation in Europe

To reassess the above expectations, investors are awaiting the release later today of headline inflation data for Europe for December, which will clarify the extent of inflationary pressures facing policymakers at the European Central Bank.

By 10:00 GMT, the annual consumer price index for Europe is due. Market expectations point to a rise of 2.0% in December, down from 2.1% in November, while core inflation is expected to remain at 2.4%, in line with the previous reading.

Euro outlook

Here at Economies.com, we expect that if inflation data come in cooler than currently anticipated by markets, the likelihood of European interest rate cuts this year will increase, which would imply renewed downward pressure on the euro’s exchange rate in the foreign exchange market.

The Australian dollar rose in the Asian market on Wednesday against a basket of global currencies, extending its gains for a fourth consecutive day against its US counterpart and reaching its highest level in 15 months, supported by a surge in global commodity and base metal prices.

These gains came despite data released today in Sydney showing a slowdown in inflation in Australia during November, easing inflationary pressure on policymakers at the Reserve Bank of Australia.

Price overview

• Australian dollar exchange rate today: The Australian dollar rose by 0.45% against the US dollar to 0.6767, the highest level since October 2024, from the day’s opening level of 0.6736, after recording a low of 0.6717.

• The Australian dollar ended Tuesday’s trading up 0.35% against the US dollar, marking its third consecutive daily gain, amid US stock indices climbing to new record highs.

Global commodity prices

Global commodity and metal prices are currently witnessing a fresh wave of record gains, driven by rising demand from major economies led by China and the United States, alongside geopolitical tensions that have reinforced investors’ shift toward base metals as a safe haven.

This rise is reflected positively on the Australian economy, which is one of the world’s leading exporters of iron ore, coal, and gold, as it helps boost the trade surplus and increase revenues for companies operating in the mining sector.

It also provides strong support to the government budget through higher fee and tax revenues, giving the Australian economy greater flexibility to cope with global inflationary pressures while maintaining stable growth rates.

Inflation in Australia

Data released on Wednesday by the Australian Bureau of Statistics showed that the headline consumer price index rose 3.4% year on year in November, below market expectations of a 3.6% increase, compared with a 3.8% reading in October.

The slowdown in Australian inflation exceeded expectations in November.

These data point to a slight easing of inflationary pressures on policymakers at the Reserve Bank of Australia. However, inflation remains above the bank’s medium-term target range of 2%–3%, which reduces the likelihood of an Australian interest rate cut in February.

Australian interest rates

• Following today’s data, market pricing for a 25 basis point cut in Australian interest rates in February remained steady around 33%.

• To reassess these expectations, investors are awaiting further data on inflation, employment, and wages in Australia ahead of the April meeting.

US stock indices rose during Tuesday’s trading session, extending their gains as technology and energy stocks rebounded amid ongoing assessment of the situation in Venezuela.

Richmond Federal Reserve President Thomas Barkin said that any upcoming decisions on interest rates will require clear and precise economic data, given the risks surrounding the central bank’s dual mandate of price stability and maximum employment.

Meanwhile, Federal Reserve member Steven Miran stated that the central bank will need to cut interest rates by more than 100 basis points during 2026, arguing that current monetary policy remains restrictive and is weighing on economic activity.

Markets are now awaiting the release of the US monthly jobs report for December, due on Friday, for further signals on the future direction of Federal Reserve policy.

In trading, the Dow Jones Industrial Average rose by 0.5%, or 241 points, to 49,218 as of 16:49 GMT. The broader S&P 500 gained 0.2%, or 16 points, to 6,918, while the Nasdaq Composite advanced by 0.2%, or 38 points, to 23,433.