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. 

Euro rose in European trade for the second session against dollar away from recent two-month lows, amid prospects for additional European rate hikes.

Such prospects are based on bullish remarks by ECB officials following surprise increases by Reserve Bank of Australia, and Bank of Canada. 

EUR/USD rose 0.2% to 1.0717, with a session-low at 1.0692, after rising 0.1% on Wednesday, the second profit in three days away from two-month lows at 1.0635. 

European Remarks

European Central Bank President Christine Lagarde said ahead of European Parliament in Brussels that inflationary pressures in the euro zone remains strong, and future decisions on interest rates must be based on bringing inflation back to 2%. 

European Central Bank member Gabriel Makhlof said European interest rates are likely to be high for an extended duration before reaching its peak. 

Global Central Banks

Both the Reserve Bank of Australia and Bank of Canada raised interest rates by 25 basis points, which were unexpected moves.

European Rates

Such recent bullish remarks and sudden moves by global banks indicate a likely decision by the ECB to raise interest rates for a longer duration.

Markets are now fully pricing in a 0.25% rate hike at next week's meeting by the European Central Banks, and there's a likelihood for an additional 0.25% rate hike in July. 

Price Gap

The current gap in interest rates between Europe and the US stands at 150 basis points and could shrink to 125 basis points next week. 

Canadian dollar rose against most major rivals on Wednesday after an unexpected decision on interest rates. 

Bank of Canada announced a surprise 0.25% interest rate hike to 4.75% from 4.5%, confounding analysts' expectations of no change in policies. 

Such an unexpected step comes amid aggressive steps to control inflation and bring inflation under control.

Canadian dollar rose against its US counterpart as of 20:01 GMT by 0.2% to 0.7477. 

Australian Dollar

AUD/USD fell 0.2% to 0.6657 as of 20:01 GMT.

It comes after data showed Australia's GDP rose 0.2% in the first quarter of the year, while analysts expected a slowdown to 0.3% from 0.6% in the previous reading.

US Dollar

The dollar index stabilized at 104.1 as of 19:44 GMT, with a session-high at 104.3, and a low at 103.6. 

Allianz chieft economist Muhammad Al-Aryan said that while concerns about a US debt default have subsided, markets now are looking forward to the Fed's efforts to contain inflation.

Despite risks surrounding high interest rates in the last 15 months, the tech sector was particularly brilliant amid the AI industry boom.

Otherwise, earlier US data showed the goods trade deficit declining by 23.9% y/y, as exports rose 5.8%, and imports tumbled 2.3% in April.

Gold prices fell on Wednesday even as the dollar stabilized against major rivals but the precious metal was under pressure from uncertainty as investors await inflation data and the Federal Reserve's meeting.

US Treasury Secretary Janet Yellen said that liquidity in the US banking sector remains good, and added the US economy remains strong as consumer spending strengthens. 

Yellen expects US authorities to carry on efforts to control and cut down inflation in 2024 and 2025. 

Allianz chieft economist Muhammad Al-Aryan said that while concerns about a US debt default have subsided, markets now are looking forward to the Fed's efforts to contain inflation.

Despite risks surrounding high interest rates in the last 15 months, the tech sector was particularly brilliant amid the AI industry boom.

Otherwise, earlier US data showed the goods trade deficit declining by 23.9% y/y, as exports rose 5.8%, and imports tumbled 2.3% in April.

The Dollar index settled at 104.1 as of 19:44 GMT, with a session-high at 104.3, and a low at 103.6. 

Gold spot prices fell 1.2% as of 19:45 GMT, or $23.2 to $1,958.3 an ounce.