Gold prices fell in European trade for the first time in three sessions off nine-month highs on profit-taking while dollar rebounds.
Now investors await US GDP data for the fourth quarter, expected to provide more clues on the pace of policy tightening in the US.
Gold Prices Today
Gold prices fell 0.6% to $1,925 an ounce, with a session-high at $1,939, after rising 0.3% yesterday, the second profit in a row, with a nine-month high at $1,942 as dollar weakens against a batch of major rivals.
The Dollar
The dollar index rose over 0.1% away from eight-month lows against a basket of major rivals, pressuring dollar-denominated precious metals.
Traders continue to shun big positions ahead of US growth data, expected tomorrow and crucial for gauging the pace of policy tightening.
The Federal Reserve is holding its first policy meeting of the year next week to assess growth and inflation developments and decide on policy, with analysts expecting a reduced 0.25% rate hike.
Estimates
Markets are awaiting US GDP growth data before taking positions, with weak data forcing the Fed to slow down its pace of policy tightening and boosting gold prices, and vice versa.
Analysts believe that for gold to reliably pierce the $2,000 levels, dollar has to continue its decline.
The SPDR
Gold holdings at the SPDR Gold Trust rose 0.28 tones yesterday to a total of 917.34 tones, the highest since December 27.
Euro rose in European trade against dollar for the sixth straight session, hovering near nine-month highs on strong prospects for European interest rates.
Now investors await important German business climate data for January, expected to show improvement for the third month in a row.
EUR/USD rose 0.25% to 1.0911, with a session-low at 1.0877, after closing up 0.1% yesterday, the fifth profit in a row, marking nine-month highs at 1.0925.
Bullish Remarks
ECB officials strongly hinted in recent remarks at successive 0.5% rate hikes in February and March and beyond.
ECB President Christine Lagarde said in the Economic Forum in Davos that inflation remains too high, and the ECB will continue hiking rates until inflation is brought back to 2%.
European Rates
Markets now widely expect the European Central Bank to increase interest rates by successive 0.5% hikes in upcoming meetings to control inflation.
Data
Now investors await German business climate data, expected to show an increase for the third month in a row, in turn underpinning the common currency.
Dollar rose in European trade against a basket of major rivals away from recent eight-month lows, but gains remain limited due to Fed interest rate prospects.
Now investors await important US data later today for January, which will provide important clues on first quarter growth.
The Index
The dollar index rose 0.2% to 102.17, with a session-low at 101.71, after rising 0.1% yesterday, the first profit in three days away from eight-month lows at 101.52.
Fed Rates
Pricing for a 0.25% rate hike by the Federal Reserve in February stands at 100%, slowing it down from recent 0.5% rate hikes.
Major Sectors
Now investors await a batch of crucial important data later today on the US economy, including the manufacturing PMI, expected at 46 in January, down from 46.2 in December, and the services PMI, expected at 45.3.