Gold prices rose in the European market on Monday, extending gains for the second consecutive day to reach an all-time high, moving toward the $3,800 per ounce barrier for the first time in history, supported by the decline of the US dollar in the foreign exchange market.

This comes amid growing expectations of a more accommodative path for US interest rate cuts, especially after the latest signals from the Federal Reserve, while investors this week await more decisive evidence that could shape the outlook for US monetary policy in the period ahead.

Price Overview

• Gold prices today: Gold rose by 1.1% to ($3,726.68), an all-time high, from the opening level at ($3,685.05), recording a low at ($3,683.93).

• At Friday’s settlement, gold gained 1.1%, its first rise in three days, driven by buying activity from corrective levels.

• Last week, gold rose by 1.2%, marking a fifth consecutive weekly gain, its longest winning streak since late 2024, supported by strong demand for the metal as the best alternative investment.

US Dollar

The dollar index fell on Monday by about 0.15%, retreating from a two-week high at 97.8 points, reflecting a decline in US currency levels against a basket of major and minor counterparts.

Beyond profit-taking and correction activity, US dollar levels are pressured by growing expectations of further Fed rate cuts in the coming period.

US Interest Rates

• The Federal Reserve carried out its first interest rate cut since December, lowering by 25 basis points last week, signaling openness to further easing.

• The Fed’s median projections point to additional rate cuts of 50 basis points in 2025.

• The median expectations of Fed members show the bank moving toward one 25-basis-point cut in 2026, with a similar cut expected in 2027.

• According to the CME FedWatch tool: the pricing of a 25-basis-point Fed rate cut in the October meeting is currently steady at 92%, while the probability of holding rates unchanged stands at 8%.

• Several Fed officials are scheduled to speak this week, with Chair Jerome Powell set to give remarks on Tuesday, as investors closely monitor their comments for clues on the future direction of monetary policy.

• The market is also focused on the release of the US core PCE price index on Friday for indications on the pace of further rate cuts.

Gold Outlook

Giovanni Staunovo, analyst at UBS, said: I expect gold to reach new record levels this week, with the possibility that Fed officials may signal further interest rate cuts.

Staunovo added: The pace and size of potential US interest rate cuts will depend heavily on the economic data scheduled for release in the US starting this week.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, increased on Friday by 18.9 metric tons, the biggest daily rise since March 21, raising the total to 994.56 metric tons, the highest level since August 12, 2022.

The euro fell in the European market on Monday against a basket of global currencies, deepening its losses for the fourth consecutive day against the US dollar, recording its lowest level in nearly two weeks, amid negative pressure on the single currency, especially with focus on buying the US currency as the best alternative investment.

After the European Central Bank’s latest hawkish meeting, the chances of cutting European interest rates before the end of this year declined, and to confirm those expectations investors are awaiting further evidence on the path of monetary easing in the eurozone.

Price Overview

• Today’s euro exchange rate: The euro fell against the dollar by 0.15% to $1.1726, its lowest since September 15, from an opening level of $1.1744, with a high of $1.1748.

• The euro ended Friday’s session down 0.35% against the dollar, marking its third daily loss in a row, amid concerns over financial stability in Europe.

US Dollar

The dollar index rose by about 0.2% on Monday, extending gains for the fourth straight session, hitting a two-week high of 97.81 points, reflecting the continued rise of the American currency against a basket of global currencies.

This rise came as traders reassessed near-term expectations after the Federal Reserve cut interest rates last week but signaled that further monetary easing would proceed only gradually.

About 10 Federal Reserve officials, including Chairman Jerome Powell, are scheduled to speak this week, with investors closely monitoring their views on the economy and the independence of the US central bank.

European Interest Rates

• In line with expectations, the European Central Bank this month kept key interest rates unchanged at 2.15%, their lowest level since October 2022, marking the second meeting in a row with no change.

• The ECB said in its monetary policy statement: inflation is currently approaching the 2% medium-term target, and the Governing Council’s assessment of inflation expectations has not changed overall.

• Sources: Policymakers at the ECB believe there is no need for further interest rate cuts to achieve 2% inflation, despite new economic forecasts pointing to a decline in rates over the next two years.

• Sources: Unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.

• Money market pricing for a 25-basis-point ECB rate cut in October fell from 30% to below 10%.

• Traders have reduced their bets on ECB monetary easing, indicating the end of this year’s rate-cutting cycle.

• To reprice those odds, investors are awaiting a stream of upcoming European economic data, in addition to monitoring comments from ECB officials.

The Japanese yen fell in Asian markets on Monday at the start of the week’s trading against a basket of major and minor currencies, recording its lowest level in two weeks against the US dollar, with the continued rise of the American currency in the foreign exchange market.

The decline also came after less hawkish comments from Bank of Japan Governor Kazuo Ueda, which reduced the likelihood of a rate hike in October, as investors await further evidence on the path of monetary policy normalization in the world’s fourth-largest economy.

Price Overview

• Today’s yen exchange rate: The dollar rose against the yen by 0.3% to ¥148.38, its highest since September 8, from an opening level of ¥147.94, with a low of ¥147.84.

• The yen ended Friday’s session slightly higher by less than 0.1% against the dollar, its first gain in three days, after the Bank of Japan meeting results were released.

US Dollar

The dollar index rose by about 0.2% on Monday, extending its gains for the fourth consecutive session, hitting a two-week high of 97.81 points, reflecting continued strength of the US currency against a basket of global currencies.

This rise came as traders reassessed near-term expectations after the Federal Reserve cut interest rates last week but signaled that further monetary easing would proceed only gradually.

Around 10 Federal Reserve officials, including Chairman Jerome Powell, are scheduled to speak this week, with investors closely watching their views on the economy and the independence of the US central bank.

Kazuo Ueda

Governor Ueda said on Friday: “We must pay attention to the impact of trade policies on financial markets, foreign exchange markets, as well as on Japan’s economy and prices.”

He added that the Bank of Japan will continue to raise interest rates if the economy and prices move in line with expectations, depending on improvements in economic and price conditions.

Commenting on the opposition of board members Hajime Takata and Naoki Tamura, who preferred a rate hike, Ueda said: the board did not agree on the proposal put forward by Takata and Tamura.

On the Federal Reserve’s decision, Ueda said: “The Fed’s rate cut will support the US economy, while there is no change in the outlook for the global economy.”

Japanese Interest Rates

• Following Ueda’s comments, market pricing for a 25-basis-point hike at the October Bank of Japan meeting fell from 75% to below 50%.

• To reprice those odds, investors are awaiting further data on inflation, unemployment, and wages in Japan.

Gold prices rose during Friday’s trading despite the dollar strengthening against most major currencies, with the precious metal recording gains for the fifth consecutive week as markets focused on the Federal Reserve’s monetary policy path.

Neel Kashkari, President of the Minneapolis Federal Reserve, praised the central bank’s decision earlier this week to cut interest rates by 25 basis points, saying that similar cuts at the final two meetings of this year would be appropriate.

Former Fed member James Bullard also stated that the 25-basis-point rate cut was a good step and expects two additional cuts totaling 50 basis points before the end of the year.

Meanwhile, the US dollar index rose by 0.3% to 97.6 points at 20:08 GMT, hitting a high of 97.8 points and a low of 97.2 points.

As for trading, spot gold rose by 1.1% to $3,717.9 per ounce at 20:09 GMT, with the precious metal gaining 0.5% this week.