Gold prices fell in European trading on Thursday, extending losses for the second consecutive day and hitting a six-week low, as continued selling in precious metals markets was driven by global inflation concerns amid the escalating war with Iran.

The US dollar maintained its gains against a basket of currencies after the Federal Reserve kept interest rates unchanged for the second consecutive meeting and warned of rising inflation due to higher energy prices.

Price overview

Gold prices today: gold fell 2.75% to $4,687.03 per ounce, the lowest level since February 9, from an opening level of $4,818.34, after recording a high of $4,867.17.

At Wednesday’s close, gold lost 3.75%, marking its fifth loss in the past six sessions, pressured by a stronger dollar following a hawkish Federal Reserve meeting.

US dollar

The dollar index rose 0.1% on Thursday, holding gains for the second consecutive session and reflecting continued strength in the US currency against a basket of major and minor currencies.

Investor focus remains on buying the US dollar as a preferred alternative investment amid the escalation of the Iran war and rising global energy prices, which are fueling inflation concerns.

Federal Reserve

At the conclusion of its second monetary policy meeting this year, and in line with expectations, the Federal Reserve kept interest rates unchanged on Wednesday for the second consecutive meeting.

The Federal Open Market Committee voted 11–1 to maintain the benchmark interest rate at a range of 3.50%–3.75%, the lowest level since September 2022.

Monetary policy statement

The Federal Reserve’s policy statement indicated that the impact of the war with Iran on the US economy remains uncertain, but is expected to push inflation higher in the short term due to the energy price shock.

The Fed said current economic indicators show solid growth in economic activity, while job gains remain relatively moderate, with the unemployment rate stable in recent months, and inflation still relatively elevated.

The central bank reiterated its dual mandate of achieving maximum employment and maintaining inflation at 2% over the long term.

It also noted that uncertainty continues to dominate the economic outlook, particularly regarding the impact of geopolitical developments in the Middle East.

The Federal Open Market Committee will continue monitoring incoming data and stands ready to adjust monetary policy if risks emerge that could hinder its objectives.

Economic projections

The Fed’s quarterly economic projections released on Wednesday included several revisions:

Economic growth: the Fed raised its US growth forecast for this year to 2.4% from 2.3%, for 2027 to 2.3% from 1.9%, and for 2028 to 2.1% from 1.9%.

Headline inflation: the Fed raised its inflation forecast for this year to 2.7% from 2.6% in December projections, for 2027 to 2.2% from 2.1%, while keeping 2028 unchanged at 2.0%.

Core inflation: the Fed raised its core inflation forecast for this year to 2.7% from 2.5%, while leaving 2027 at 2.2% and 2028 at 2.0%.

Target interest rate: the Fed kept its projected rate at 3.50% for this year, and at 3.25% for both 2027 and 2028.

Jerome Powell

Key comments from Federal Reserve Chair Jerome Powell during Wednesday’s press conference:

The implications of Middle East developments remain uncertain.

Elevated inflation largely reflects goods prices, driven in part by tariffs.

Near-term inflation expectations have risen in recent weeks due to Middle East developments.

Higher energy prices will lift headline inflation in the short term.

A series of inflation shocks has slowed recent progress on inflation.

Energy inflation cannot be ignored until goods inflation stabilizes.

Oil price outlook depends on inflation expectations and the broader context of above-target inflation over the past five years.

The median rate path has not changed, but there has been a shift toward fewer rate cuts.

Progress on inflation is expected, but not as strong as previously hoped.

If inflation does not improve, rate cuts will not occur.

Part of the oil shock is reflected in rising inflation expectations and limited progress on inflation.

The ultimate impact of the oil shock will be downward pressure on spending and employment, and upward pressure on inflation.

I am not saying unemployment is more at risk than inflation.

If a new Fed chair is not confirmed by the end of my term, I will serve as acting chair.

I have no intention of leaving the Federal Reserve until the Justice Department investigation is completed.

This energy supply shock is a one-time event.

The possibility of a rate hike has been discussed.

In the short term, data center expansion is slightly lifting inflation and may also raise the neutral rate.

US interest rates

Following the meeting, according to CME’s FedWatch tool, the probability of keeping rates unchanged at the April meeting fell from 99% to 95%, while the probability of a 25 basis point rate hike rose from 1% to 5%.

Gold outlook

Ole Hansen, head of commodity strategy at Saxo Bank, said gold has dropped sharply for the second consecutive day after breaking a key support level below $5,000, amid dollar strength and more hawkish comments from Fed Chair Jerome Powell following the latest FOMC meeting.

Nitesh Shah, commodities strategist at WisdomTree, said: “Geopolitical risks will persist and remain a strong catalyst for gold prices. Despite near-term consolidation, I can easily see gold reaching $6,000 by year-end.”

SPDR Fund

Holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, fell by 2.57 metric tons on Wednesday, marking the fifth consecutive daily decline, bringing total holdings down to 1,066.99 metric tons, the lowest level since January 9.

The euro rose in European trading on Thursday against a basket of global currencies, resuming its recovery from seven-month lows against the US dollar, supported by buying activity at cheaper levels and a weaker US currency following the Federal Reserve meeting.

The European Central Bank is set to conclude later today its second monetary policy meeting of 2026, with expectations that interest rates will remain unchanged for the sixth consecutive meeting. The upcoming statement is expected to provide further signals and clarity بشأن the future path of interest rates this year.

Price overview

Euro exchange rate today: the euro rose 0.35% against the dollar to $1.1491, from the session opening level of $1.1452, after recording a low of $1.1450.

The euro ended Wednesday’s trading down 0.75% against the dollar, marking its first loss in three days, following strong US economic data and a pause in its recovery from a seven-month low of $1.1411.

European Central Bank

The European Central Bank will conclude later today its regular monetary policy meeting, with expectations for rates to remain unchanged, while the policy statement is likely to provide further insight into the trajectory of interest rates throughout the year.

Expectations are currently stable for keeping European interest rates unchanged at 2.15%, the lowest level since October 2022, for the sixth consecutive meeting.

The interest rate decision and monetary policy statement are due at 13:15 GMT, followed by a press conference from ECB President Christine Lagarde at 13:45 GMT.

Euro outlook

According to FX News Today, if the European Central Bank’s comments come in more hawkish than expected, this would reduce the likelihood of interest rate cuts this year and support further gains in the euro against a basket of global currencies.

US dollar

The dollar index fell 0.25% on Thursday, reflecting weakness in the US currency against a basket of global currencies.

On Wednesday, the Federal Reserve kept interest rates unchanged for the second consecutive meeting, while projecting higher inflation, stable unemployment, and only one rate cut in borrowing costs this year.

Federal Reserve Chair Jerome Powell described this outlook as highly uncertain, as policymakers assess the impact of US-Israeli strikes on Iran.

The Japanese yen rose in Asian trading on Thursday against a basket of major and minor currencies, resuming its recovery against the US dollar and stabilizing above a 20-month low, supported by renewed buying from lower levels following the Bank of Japan’s monetary policy decision.

The Bank of Japan kept interest rates unchanged for the second consecutive meeting, stating that the Japanese economy is “recovering moderately” despite uncertainty stemming from geopolitical conflicts.

Price overview

Japanese yen exchange rate today: the dollar fell 0.2% against the yen to ¥159.54, from the session opening level of ¥159.81, after recording a high of ¥159.85.

The yen ended Wednesday’s trading down more than 0.5% against the dollar, marking its first loss in three days, after hitting a 20-month low of ¥159.90.

Bank of Japan

In line with most market expectations, the Bank of Japan on Thursday kept its benchmark interest rate unchanged at 0.75%, the highest level since 1995, for the second consecutive meeting.

The decision to hold rates was approved by an 8–1 vote, with one member calling for a 25 basis point increase to 1.0%, as policymakers preferred to pause and assess recent economic developments.

The Bank of Japan warned that the war with Iran and tensions in the Middle East are pushing crude oil prices higher, creating upward pressure on core inflation in Japan.

The central bank added that while core inflation is expected to temporarily slow below 2% in the near term due to easing rice price increases, the Middle East conflict will exert upward pressure driven by the recent rise in crude oil prices.

Japanese interest rates

Following the meeting, market pricing for a 25 basis point rate hike at the April meeting remained below 30%.

Investors are awaiting further data on inflation, unemployment, and wages in Japan to reassess these expectations.

Kazuo Ueda

Bank of Japan Governor Kazuo Ueda is scheduled to speak shortly on the outcome of the policy meeting, with his comments expected to provide further strong clues about the future path of policy normalization and interest rate hikes this year.

Opinions and analysis

Analysts at Capital Economics wrote that the Bank of Japan did not reveal much by keeping rates unchanged today, but they still expect a rate hike at the next meeting in April.

They added that the brief statement provided little clarity on the future path of monetary policy, and that more insight is likely to come from Governor Ueda’s press conference later today.

US dollar

The dollar index fell 0.25% on Thursday, reflecting weakness in the US currency against a basket of global currencies.

On Wednesday, the Federal Reserve kept interest rates unchanged for the second consecutive meeting, while projecting higher inflation, stable unemployment, and only one rate cut this year.

Federal Reserve Chair Jerome Powell described this outlook as highly uncertain, as policymakers assess the impact of US-Israeli strikes on Iran.

Wall Street closed sharply lower on Wednesday after the US Federal Reserve kept interest rates unchanged and projected only one rate cut this year, as officials assessed economic risks stemming from higher oil prices and the war between the United States, Israel, and Iran.

Updated projections from policymakers at the US central bank showed that the benchmark interest rate would decline by just a quarter percentage point by year-end, with no indication of the timing.

Major US stock indices extended their losses following Federal Reserve Chair Jerome Powell’s press conference, where he reiterated the uncertainty the war poses to the economic outlook.

Michael Rosen, Chief Investment Officer at Angeles Investments in Santa Monica, California, said: “The Fed is in wait-and-see mode. With inflation still above target, the economy running above trend, and elevated uncertainty around the path of the Iran war, there is no justification for easing policy.” He added: “The Fed’s biggest challenge, worsened by the war, is balancing its dual mandate of full employment and low, stable inflation. If the war persists and oil prices remain high, the economy will slow. But easing policy would be a mistake because it would fuel inflation.”

Earlier, the US Labor Department reported that producer prices rose 3.4% year-on-year, exceeding economists’ expectations of 2.9%, with the potential for further acceleration due to the Middle East conflict and rising shipping and oil costs.

Brent crude prices rose to nearly $110 per barrel following reports of attacks on Iranian oil facilities in the Pars and Asaluyeh regions.

On the indices front, the S&P 500 fell 1.36%, or about 91 points, to close at 6,624.70, its lowest level in nearly four months. The Nasdaq Composite declined 1.46%, or 327 points, to 22,152.42, while the Dow Jones Industrial Average dropped 1.63%, or about 768 points, to 46,225.15.

All 11 sectors of the S&P 500 ended lower, led by consumer staples, down 2.44%, followed by consumer discretionary, down 2.32%.

At the company level, AMD shares rose 1.6% after reaching an agreement with Samsung Electronics to expand their strategic partnership in supplying memory chips for AI infrastructure, while Nvidia fell 0.8% after receiving Beijing’s approval to sell its second-most advanced AI chips in China.

Micron Technology shares declined about 0.5% despite beating quarterly revenue estimates, supported by strong demand for AI-related memory chips. Meanwhile, Apollo Global Management rose 2.1% after rebounding from last week’s losses, Lululemon gained 3.8% following its earnings release, and Macy’s jumped 4.7% after forecasting a smaller tariff impact in the second half of the year and reporting better-than-expected quarterly profits.

Declining stocks dominated the market, outnumbering advancers on the S&P 500 by a ratio of 5.2 to 1, with 17 new highs and 15 new lows recorded. On the Nasdaq, 42 stocks hit new highs while 218 recorded new lows.

Trading volume on US exchanges was relatively light, with 19.4 billion shares changing hands, compared with an average of 19.8 billion over the past 20 sessions.