Gold prices rose in European trade on Monday away from a one-week low, and on track for the first profit in three days, ahead of the US-China London trade talks. 

The gains are boosted by the dollar’s decline against a basket of major rivals as traders await more important clues on the odds of a Fed rate cut in the second half of the year. 

The Price

Gold prices rose 0.55% today to $3328 an ounce, with a week low at $3293.

On Friday, the precious metal lost 1.25%, the second loss in a row on profit-taking away from a four-week high at $3403.

Gold fell back then after upbeat US labor data, which hurt the odds of a Fed rate cut in October.

The precious metal marked a 0.65% weekly profit last week on haven demand amid US-China trade tensions.

London Trade Talks

Later today in London, The US and China will conduct new trade talks following the crucial Trump-Xi trade talk last week, which helped accelerate the momentum of negotiations between both sides.

The Dollar

The dollar index fell over 0.3% on Monday against a basket of major rivals, providing some support to gold and other greenback-denominated gold futures.

Trump said he’ll soon announce his choice for the next Federal Reserve Chair, who would focus primarily on rate cuts.

US Rates

According to the Fedwatch tool, the odds of a 0.25% Fed June rate cut stood at just 1%, and at 17% for a July rate cut.

According to the London Securities Exchange data, traders now expect 50 basis points of US interest rate cuts overall this year, likely starting in October.

SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tons on Friday to a total of 934.21 tons, away from May 13 highs.

The euro rose in European trade on Monday against a basket of major rivals, resuming gains against the dollar and moving once more towards a six-week high as the odds of an ECB rate cut in July receded.

The gains come after the Trump-Xi phone call last week, with both sides agreeing to resume trade talks in London later today.

The Price

The euro rose 0.3% against the dollar to $1.1425, with a session-low at $1.1389.

The euro lost 0.45% on Friday on profit-taking away from a six-week high at $1.1495.

Last week, the euro rose 0.2% against the dollar, marking the fourth weekly profit in a row. 

European Rates

ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.

According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.  

The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues. 

London Trade Talks

Later today in London, The US and China will conduct new trade talks following the crucial Trump-Xi trade talk last week, which helped accelerate the momentum of negotiations between both sides.

The Japanese yen rose in Asian trade on Monday against a basket of major rivals, recovering from a week low against the dollar on haven demand ahead of a new round of trade talks between the US and China.

Recent Tokyo data showed the Japanese GDP grew better than expected in the first quarter of the year, bolstering the odds of an interest rate hike in June.

The Price

The USD/JPY price fell 0.3% today to 144.34, with a session-high at 144.95.

The yen lost 0.9% against the dollar on Friday, plumbing a week low at 145.09 following strong US payrolls data.

The yen also lost 0.55% overall last week against the dollar, the second weekly loss in A row.

London Trade Talks

Later today in London, The US and China will conduct new trade talks following the crucial Trump-Xi trade talk last week, which helped accelerate the momentum of negotiations between both sides.

Japan’s GDP

Japan’s GDP was unchanged in the first quarter of the year, beating estimates of a 0.2% contraction.

Following the data, the odds of a Bank of Japan 0.25% interest rate hike in June rose from 40% to 45%.

Bank of Japan Deputy Governor Shinichi Uchida said the bank will continue to raise interest rates if the economy recovers from the negative impact of US tariffs, however he still cautioned that the economic outlook remains highly uncertain.

Now traders await more Japanese data on inflation, unemployment, and wages to gather additional clues.

Gold prices fell on Friday following the monthly payrolls report which was mostly solid.

The US economy added 139 thousand new jobs in May, down slightly from 147 thousand in April, while analysts expected the addition of 125 thousand. 

The data reduced the odds of a Fed rate cut soon, especially as unemployment stabilized at 4.2%.

Gold prices were pressured this week after a Trump-Xi meeting that ended with both agreeing to resume negotiations. 

Otherwise, the dollar index rose 0.5% as of 21:07 GMT to 99.1, with a session-high at 99.3, and a low at 98.6.

On trading, gold futures due in August fell 0.8%, or $28.5 to $3346 an ounce, while still marking a 1% weekly gain.