Gold prices rose in European trade on Friday away from three-week lows and away from the barrier of $1,900, as the dollar stalls against major rivals.

Prices are also boosted as global central banks prepare to end the current cycle of policy tightening, with the European Central Bank hinting at ending interest rate hikes this week.

Gold Prices Today

Gold prices rose 0.5% to $1,919 an ounce, with a session-low at $1,909, after rising 0.2% on Thursday, the first profit in three days, away from a three-week low at $1,901. 

The Dollar

The dollar index fell 0.2% on Friday, on track for the first loss in four sessions off six-month highs at 105.43 against a basket of major rivals.

The dollar fell as well ahead of crucial US industrial production data for August, in addition to inflation forecasts and consumer confidence data. 

Strong Data

Recent US data showed retail sales rose unexpectedly in August, while producer prices rose past estimates in August, as unemployment claims were below estimates last week.

Such data bolstered the case for another US interest rate hike later this week as the US economy proves resilient. 

US Rates

Following the data, pricing for a US interest rate hike in September stood at 7%.

Odds for a 0.25% Federal Reserve interest rate hike in November fell to 41% to 36%.

ECB

Unexpectedly, the European Central Bank raised interest rates for the tenth meeting in a row, carrying on its battle against inflation.

The ECB raised interest rates by 25 basis points to 4.50%, the highest since 2001.

ECB President Christine Lagarde said that ECB members believes the current rates will help control inflation and bring it back to 2%.

The ECB will continue to rely on data to determine the duration of the currently high interest rates.

As central banks in Canada, Australia, and New Zealand pause interest rate hikes, it's now likely the global monetary policies will stall and taper out from the recent policy tightening frenzy. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 879.7 tonnes yesterday to a total of 879.7 tonnes, the lowest since January 2020.

Euro rose in European trade on Friday against a basket of major rivals following heavy losses yesterday and away from recent six-month lows against US dollar.

The euro is on track for a fresh weekly loss, the longest such streak of weekly losses in history after surprise decisions by the European Central Bank this week. 

EUR/USD rose 0.25% to 1.0667, with a session-low at 1.0733, after losing 0.8% yesterday, the second loss in a row, and the heftiest such loss since July 27, plumbing a six-month low at 1.0632 amid a heavy sell-off. 

Weekly Trades 

The euro is down 0.4% against US dollar on track for the ninth weekly loss in a row, which could be the longest ever such a streak in euro's history.

The ECB

Unexpectedly, the European Central Bank raised interest rates for the tenth meeting in a row, carrying on its battle against inflation.

The ECB raised interest rates by 25 basis points to 4.50%, the highest since 2001.

The ECB said at its policy press release that despite slowing inflation, it'll remain high for an extended duration.

The central bank asserted that upcoming decisions will rely heavily on data to decide the appropriate level and duration of high interest rates.

Lagarde 

ECB President Christine Lagarde said that ECB members believes the current rates will help control inflation and bring it back to 2%.

The ECB will continue to rely on data to determine the duration of the currently high interest rates.

The ECB cut growth forecasts this year from 0.9% to 0.7%, but expects the euro zone economy to rebound in the second half of the year.

Interest Rate Gap

The US-European interest rate currently stands at 100 basis points, the lowest since May 2022, and expected to remain so until November 2023 at least.

There's a chance however the Fed will raise interest rates by 25 basis points in November, widening the gap once more. 

Copper prices rose on Thursday after measures taken by China to support the economy served to reduce pressures on prices after data showed higher inventories, while markets asses rate decisions in the euro zone and China. 

Copper three-month futures rose 0.5% at the London Metals Exchange to $8459 a tonne , approaching a week high.

Copper demand declined this week as China's economy struggled while dollar's strength weighed on metals and made them costlier to holders of other currencies. 

Analysts at StoneX believe that coppers prices face a battle between supportive Chinese stimulus measures and suppressive dollar gains. 

A recent survey by Reuters expects China's central bank to support liquidity and maintain borrowing costs unchanged this week.

Yuan ended its local sessions today at its strongest position since September, as the Chinese central bank said it'll lower the required level of reserves that must be maintained by banks. 

However, copper inventories at the London's Metals Exchange surged to October 2022 highs.

As for other metals, aluminium rose 0.8% to $2236 a tonne, while tin rose 0.7% to $25860, as lead rose 0.6%, while nickel spiked 1.8% to $20430.

Otherwise, the dollar index rose 0.3% as of 16:16 GMT to 105.1, with a session-high at 105.3, and a low at 104.5.

Copper futures due in December rose 0.7% as of 16:09 GMT to $3.92 a pound. 

Euro extended its losses in American trade on Thursday for the second day against dollar, plumbing a four-month trough following the remarks by ECB President Christine Lagarde.

Lagarde said the interest rates have reached a constraining level that should be enough to control inflation in the medium term, which triggered speculation the ECB might be nearing the end of its policy tightening cycle. 

The remarks came after surprise decision by Bank of England to raise interest rates by 25 basis points to 4.50%, the highest since 2001. 

EUR/USD

EUR/USD fell 0.7% today to 1.0654, the lowest since May, with a session-high at 1.0752. 

The pair lost 0.25% yesterday, the first loss in four days away from a one-week high at 1.0768. 

Lagarde 

ECB President Christine Lagarde said that ECB members believes the current rates will help control inflation and bring it back to 2%. 

The ECB will continue to rely on data to determine the duration of the currently high interest rates.

The ECB cut growth forecasts this year from 0.9% to 0.7%, but expects the euro zone economy to rebound in the second half of the year.

There's no confirmation that interest rates have peaked yet. 

The ECB said at its policy press release that despite slowing inflation, it'll remain high for an extended duration.

The central bank asserted that upcoming decisions will rely heavily on data to decide the appropriate level and duration of high interest rates.