Gold prices fell in European trade on Monday for the first session in four, away from two-month highs scaled in the Asian session amid active profit-taking. 

The precious metal is still poised to break new records above $3500 as the Iran-Israel military conflict deteriorates, boosting haven demand. 

Tomorrow, the Federal Reserve will convene to discuss policies, widely expected to hold interest rates unchanged for the fourth meeting in a row.

The Price

Gold prices fell 0.65% to $3409 an ounce, with April 22 highs at $3451.

On Friday, gold rose 1.35%, the third profit in a row after Israel’s attack against Iran.

The yellow metal rallied 3.7% last week, marking the second weekly profit in a row.

The Iran-Israel War

Israel and Iran continued their mutual attacks with drones and missiles in a new escalation to tensions, triggering concerns of a wider conflict that could engulf other countries. 

Israel continues to target Iran’s military facilities and infrastructure in Syria and inside Iran, with Iran responding with waves of drone and missile attacks on Israeli cities. 

International powers have called for calm and de-escalation, with analysts expecting this exchange to be a new phase of the untraditional conflict between both sides. 

The Fed

This week, the Federal Reserve is widely expected to hold interest rates flat for the fourth meeting in a row while providing clues on the future of US interest rates in the second half of the year.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in June stood at 1%.

The odds of a July rate cut stood at a slightly better 19%.

Now traders expect 50 basis points of Fed rate cuts overall this year, starting with September then October. 

SPDR

Gold holdings at the SPDR Gold Trust rose 2.58 tons on Friday to a total of 940.49 tons, the highest since May 2.

The euro fell in European trade on Monday against a basket of major rivals, extending losses for the second straight session against the dollar and backing off a four-year peak on active profit-taking, as haven demand on the dollar mounts due to the Israel-Iran war.

 The losses are curbed by the receding odds of an ECB interest rate cut in July as traders await more clues on the path ahead for European interest rates this year.

The Price

The EUR/USD price fell 0.25% today to $1.1523, with a session-high at $1.1560.

The euro closed down 0.25% on Friday against the dollar, marking the first loss in five sessions on profit-taking away from a four-year peak at $1.1631.

The euro rose 1.4% last week against the dollar, marking the second weekly profit in a row as the odds of a European July rate cut tumbled.

The Dollar

The US dollar rose 0.25% on Monday, maintaining the gains for the second session and recovering from a three-year nadir at 97.60 against a basket of major rivals. 

Israel and Iran continued their mutual attacks with drones and missiles in a new escalation to tensions, triggering concerns of a wider conflict that could engulf other countries. 

Israel continues to target Iran’s military facilities and infrastructure in Syria and inside Iran, with Iran responding with waves of drone and missile attacks on Israeli cities. 

International powers have called for calm and de-escalation, with analysts expecting this exchange to be a new phase of the untraditional conflict between both sides. 

European Rates

ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.

According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year. 

The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues. 

The yen fell in Asian trade on Monday against a basket of major rivals, extending losses for the second straight session against the dollar as investors focus on buying up the greenback as a safe haven amid the Iran-Israel conflict. 

Later today, the Bank of Japan will be convening and will issue its decisions tomorrow, expected to maintain interest rates unchanged at 0.5%, the highest since 2008.

The Price

The USD/JPY price rose 0.55% today to 144.75, with a session-low at 143.92.

The yen lost 0.4% on Friday, the first loss in three days away from a week high at 142.79.

The yen rose 0.5% last week against the dollar, marking the first profit in three weeks on haven demand amid mounting geopolitical tensions.

US Dollar

The US dollar rose 0.25% on Monday, maintaining the gains for the second session and recovering from a three-year nadir at 97.60 against a basket of major rivals. 

Israel and Iran continued their mutual attacks with drones and missiles in a new escalation to tensions, triggering concerns of a wider conflict that could engulf other countries. 

Israel continues to target Iran’s military facilities and infrastructure in Syria and inside Iran, with Iran responding with waves of drone and missile attacks on Israeli cities. 

International powers have called for calm and de-escalation, with analysts expecting this exchange to be a new phase of the untraditional conflict between both sides. 

BOJ

Later today, the Bank of Japan will convene to decide on policies, widely expected to maintain rates unchanged at 0.5%.

BOJ policymakers will discuss the risks of the US trade trade on Japan’s export-reliant economy, which will decide the timing of the next rate hike.

Concerns about a global recession due to Trump’s tariffs could eventually affect wages and prices data, which recently showed signs of strong recovery. 

Most cryptocurrencies fell on Friday amid aversion to high-risk assets such as cryptocurrencies with investors flocking into havens such as the dollar and gold amid geopolitical tensions in the Middle East. 

Israel targeted Iranian nuclear and military facilities, in addition to army commanders and scientists with extensive air strikes, adding that it’s only the start of a prolonged operation. 

The VIX fear index on Wall Street surged 13.45% to 20.44, with a surge as well in both oil and gold prices. 

The University of Michigan’s consumer confidence index rose 15.9% this month to 60.5, above estimates of 53.5.

As for the consumer expectations index, it rose 21.9% to 58.4. 

Ethereum

On trading, ethereum fell 5.8% on Coinmarketcap to $2536.6 as of 21:21 GMT.