Gold prices declined in the European market on Thursday, retreating from a three-week high, as a result of active profit-taking and corrective movements, in addition to pressure from the strengthening US dollar in the foreign exchange market.

The rise in the American currency came after President Donald Trump stated that it is “highly unlikely” he would fire Federal Reserve Chair Jerome Powell.

The Price

• Gold spot price fell by 0.65% to $3,325.29 per ounce, down from the opening level of $3,347.23, after recording an intraday high of $3,352.32.

• Upon Wednesday's settlement, gold prices had gained 0.7%—their first rise in three sessions—reaching a three-week high of $3,377.47 per ounce, supported by a decline in the US dollar following weaker-than-expected US Producer Price Index (PPI) data.

The US Dollar

The US Dollar Index rose by 0.55% on Thursday, resuming its upward trend after a temporary pause on Wednesday. It approached a three-week high at 98.91 points, reflecting broad gains in the dollar against a basket of major and minor currencies.

President Donald Trump said on Wednesday that he does not currently plan to fire Powell but left the door open to that possibility. He also reiterated his criticism of the Fed Chair for not cutting interest rates.

US Interest Rates

• Data released on Wednesday showed a sharper-than-expected slowdown in US producer prices for June, a strong signal that consumer prices may also ease in July.

• Following the data, and according to the CME Group’s FedWatch tool: The probability of a 25 basis-point rate cut at the July meeting held steady at 2%, while the probability of holding rates steady remained high at 98%.

• For the September meeting, the probability of a 25 basis-point cut rose from 55% to 57%, while the probability of no change declined from 45% to 43%.

• According to data from the London Stock Exchange, traders are currently pricing in less than 50 basis points of cumulative rate cuts by the end of the year, with expectations for the first 25-basis-point cut in October.

• In order to reprice these expectations, investors are awaiting key economic data from the US later today, including monthly retail sales and weekly jobless claims.

Gold Outlook

• Reliance Securities senior analyst Jigar Trivedi said: “Gold slipped below $3,340 per ounce as the US dollar regained momentum following reduced uncertainty over the Fed chair’s position.”

• Trivedi added: “The flat reading of June’s US PPI indicates stable wholesale prices, suggesting that tariffs may have a smaller economic impact than initially feared.”

SPDR Gold Trust

Holdings in the SPDR Gold Trust— the world’s largest gold-backed ETF—rose by 3.15 metric tons on Wednesday, bringing the total to 950.79 metric tons, marking the highest level since June 30.

The British pound declined with the opening of the European market on Thursday against a basket of major currencies, resuming its losses after a brief pause against the US dollar and nearing a two-month low, amid concerns that UK labor market data may reinforce signs of an economic recession.

The unexpected rise in core inflation levels in the UK for June renewed inflationary pressures on Bank of England policymakers, leading to a decline in expectations of a British rate cut in August.

The Price

• GBP/USD today: The pound dropped 0.3% to (1.3384$), down from the opening price of (1.3421$), after recording a session high at (1.3428$).

• On Wednesday, the pound rose 0.25% against the dollar — its first gain in nine sessions — as part of a rebound from a two-month low at 1.3365$.

UK Inflation

The Office for National Statistics said on Wednesday that the UK’s headline inflation rate rose 3.6% year-on-year in June, above market expectations for a 3.4% increase, and up from 3.4% in May.

Core inflation rose 3.7% in June, also higher than the expected 3.5%, and up from 3.5% in May.

The unexpected jump in prices has renewed inflationary pressures on Bank of England policymakers and may slow the pace of policy easing and rate cuts in the second half of the year.

UK Interest Rates

• Traders scaled back their bets on BoE rate cuts, now expecting less than 50 basis points of easing this year.

• Market pricing for a 25-basis-point rate cut in August dropped from 80% to 65%.

Andrew Bailey

Bank of England Governor Andrew Bailey told The Times on Monday that the direction of interest rates is “certainly downward.” In the interview, he signaled that the Bank would accelerate its rate-cutting pace if further signs of “slack” emerged in the economy.

“Slack” refers to an economic condition where the economy is not operating at full capacity, characterized by rising unemployment and slowing output. This is considered disinflationary and would strengthen the central bank’s confidence in inflation falling to 2.0% by 2026, as currently projected.

UK Labor Market

The upcoming UK labor market report, due later today, is equally critical for the pound, as it’s expected to provide further signs of labor market weakness.

There are growing indications that the job tax imposed by Rachel Reeves is burdening the labor market, with more job losses likely.

Traders are also struggling with the chaotic nature of UK labor market statistics, with some survey components now deemed unreliable.

A weak jobs report would provide further evidence to the BoE that the economic recession is unfolding, warranting additional rate cuts.

And as FX markets refocus on relative interest rates, a faster pace of BoE easing would weigh heavily on the pound.

The Australian dollar slid to a three-week low against its US counterpart in Asian trading on Thursday, as open selling accelerated following gloomy labor market data out of Australia.

The data showed that the country's unemployment rate rose to its highest level in three and a half years, with fewer jobs added than expected in June. This marked the latest sign of slowing economic growth in Australia and increased the likelihood of a rate cut by the Reserve Bank of Australia in August.

The Price

• AUD/USD today: The Australian dollar dropped by 0.9% to (0.6473), its lowest level since June 24, down from the day’s opening level of (0.6553). It recorded a session high at (0.6533).

• On Wednesday, the Australian dollar rose 0.2% against the US dollar — its first daily gain in four sessions — following weaker-than-expected US producer price data.

Australian Labor Market

Figures released Thursday by the Australian Bureau of Statistics showed that the unemployment rate climbed to 4.3% in June, its highest level since November 2021, up from 4.1% in May and exceeding market expectations for a rise to 4.1%.

The Australian economy added around 2,000 new jobs in June, falling well short of market expectations for 21,000 jobs, after losing around 1,100 jobs in May.

The soft labor market is the latest indication of weak economic growth in Australia, which may prompt the Reserve Bank of Australia to ease monetary policy and cut interest rates.

Comments and Analysis

• IG analyst Tony Sycamore said: "There are clear signs of labor market weakness. This raises questions about the RBA’s decision to prioritize inflation over growth and employment at its meeting earlier this month."

• Sycamore added: "There’s no doubt the RBA will be keen to correct course at its August meeting."

• Harry Murphy Cruise, head of economic research at Oxford Economics Australia, stated: "While we’re not ringing alarm bells just yet, June’s slowdown is another solid reason for the RBA to move cautiously toward rate cuts."

Australian Interest Rates

• Following the labor market data, interest rate swap contracts now imply more than 50 basis points of easing by year-end.

• Market pricing for a 25-basis-point rate cut by the RBA in August rose from 76% to 85%.

• The RBA has cut rates twice since February, bringing the benchmark rate to 3.85%, as inflation has slowed into the target range of 2% to 3%.

Wheat prices rose on Wednesday in the Chicago Board of Trade, after the US Department of Agriculture (USDA) released its global forecasts for key crops for the 2025/26 marketing year, according to reports from the Ukrainian Agribusiness Club.

According to the USDA forecast, Ukraine’s wheat production for the 2025/26 marketing year will decline by 1 million tons to reach 22 million tons. Wheat exports are also expected to drop by 1 million tons to 15.5 million tons. As for corn, both production and export forecasts remained unchanged at 30.5 million tons and 15.5 million tons, respectively.

The global wheat market outlook for the 2025/26 marketing year points to a decline in supply (due to lower beginning stocks), an increase in consumption, a decrease in trade, and a drop in ending stocks.

Global wheat production for the 2025/26 marketing year remains unchanged at 808.6 million tons. However, output will fall in Canada (down 1 million tons to 35 million tons), Ukraine (down 1 million tons to 22 million tons), and Iran, while rising in Kazakhstan (up 1 million tons to 15.5 million tons), the European Union (up 0.7 million tons to 137.3 million tons), Pakistan, and Russia (up 0.5 million tons to 83.5 million tons).

Global consumption will rise by 0.8 million tons to reach 810.6 million tons, mainly driven by higher feed and residual use in Kazakhstan and Thailand.

Global trade will decline by 1.2 million tons to 213.1 million tons due to reduced exports from the European Union (down 2 million tons to 32.5 million tons) and Ukraine (down 1 million tons), partially offset by increased exports from Russia (up 1 million tons to 46 million tons) and the US (up 0.7 million tons to 23.1 million tons). Global ending stocks for 2025/2026 have been revised down by 1.2 million tons to 261.5 million tons, mainly due to reductions in Canada and the European Union.

Corn

Corn futures for December delivery rose by 1.1% at the close of the session to $4.24 per bushel.

Soybeans

Soybean futures for November delivery jumped by 1.8% to $10.20 per bushel.

Wheat

Wheat futures for September delivery settled 0.7% higher at $5.41 per bushel.