Gold gains ground as dollar tapers off

Gold prices rose in European trade, resuming gains as the dollar slowed down against major rivals.

Gold is mostly trading sideways ahead of the crucial US consumer prices data, and the Federal Reserve's policy decisions next week. 

Gold Prices Today

Gold prices rose over 0.4% to $1,948 an ounce, with a session-low at $1,939, after losing 1.2% yesterday, the first loss in three days as US 10-year treasury yields spiked. 

Bank of Canada also surprised markets with  0.25% rate hike to interest rates to 4.75%, the highest in 22 years. 

The Dollar

The dollar index fell 0.2% on Thursday for another session against a basket of major rivals, underpinning dollar-denominated gold futures. 

Such decline came after weak US services data, which triggered concerns about the health of the US economy in the second quarter of the year, and boosted chances of no change in interest rates at the Federal Reserve's policy meeting next week. 

US Rates

Current pricing for a 0.25% rate hike at the Fed's June meeting stands at 30%. 

Most economists polled by Reuters believe the Fed won't raise interest rates for the first time in over a year at its next meeting.

Data

Now investors await upcoming data later today on the US labor sector , specifically unemployment claims to better gauge the path ahead for the US economy. 

Estimates

Citibank cut down its price forecasts for gold prices from $2,100 to $1,915 in the next three months, while noting that fresh tailwind in support of gold futures will appear before the end of 2023. 

Citibank believes gold prices remain a solid safe haven for small investment funds and wallets even as the Federal Reserve continues to tighten policies.

The SPDR

Gold holdings at the SPDR Gold Trust fell 3.46 tones yesterday, the second such decline in a row, to a total of 934.65 tones, the lowest since May 15.