Gold prices rose in European trade on Tuesday, expanding the gains for the second straight day and hitting a record high at $3000 as haven demand increases while the US dollar declines. 

The developments come ahead of the Federal Reserve’s policy meeting later today, widely expected to hold rates unchanged.

Prices

Gold prices rose 0.9% today to $3028 an ounce, a record high, with a session-low at $2999.

On Monday, gold rose 0.55%, the fourth profit in five days, hitting a record high at $3000.

The Dollar

The dollar index fell 0.2% on Tuesday on track for the third straight loss in a row, and about to plumb a five-month trough against main rivals.

A  weaker dollar makes greenback-denominated gold futures more attractive to holders of other currencies.

Recent data showed US consumer confidence fell to 2-1/55 year lows, with a smaller than expected rise in retail sales in new signs of a potential economic slowdown.

The Fed

Later today, the Federal Reserve will convene to discuss policies, with markets expecting no changes in interest rates.

Data released last week showed US consumer prices slowed down more than expected in February, bolstering the case for a Fed rate cut in the first half of the year.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in March stood at just 1%, while the odds of a May rate cut stood at 30%.

The odds of a Fed June 0.25% interest rate cut stood at 75%.

SPDR

Gold holdings at the SPDR Gold Trust rose 0.86 tons on Monday, the fifth increase in a row to a total of 907.27 tons, the highest since February 25.

The Japanese yen fell in European trade on Tuesday on track for the third loss in a row against the dollar ahead of the Bank of Japan’s policy meeting later today.

The BOJ is expected to maintain interest rates unchanged as concerns grow about outside economic risks.

The Price

The USD/JPY pair rose 0.4% today to 149.78 yen per dollar, the highest since March 5, with a session-low at 149.10.

The yen lost 0.4% on Monday, the second loss in a row amid an improving risk appetite in the markets.

The BOJ

Later today, the BOJ will convene with the decision due tomorrow, expected to hold rates at 0.5%, the highest since 2008.

BOJ policymakers will discuss the impact of the US trade war on Japan’s export based economy, which will determine the timing of the next interest rate hike.

Concerns about a global economic slowdown prompted by US President Trump’s tariffs could weigh on Japanese wages and consumer prices, which are approaching the 2% target.

BOJ Governor Kazuo Ueda stated ahead of the Diet last week that he expects a revival in consumption, but he remains very concerned about outside economic uncertainty. 

Reuters reported that BOJ policymakers believe the economy is on the right track but global economic uncertainties could impact the timing of the next BOJ rate hike.

Japanese Yields 

Japan’s 10-year government treasury yields fell 0.75% today to a week low at 1.495%, pressuring the yen.

It comes amid an improving risk appetite in the markets, while the odds of a Japanese interest rate hike in the first half of the year receded. 

Ethereum rose on Monday as markets follow the latest geopolitical developments in the Middle East and their impact on high-risk assets such as cryptocurrencies. 

US President Donald Trump said Iran will carry the responsibility of any attack made by Yemen’s Houthi group.

He asserted the US army will expand its biggest military operation in the Middle East since his return to the White House.

Earlier US data showed retail sales rose 0.2% m/m in February to $722.7 billion.

Analysts now expect the Federal Reserve to hold interest rates unchanged at this week’s policy meeting.

However, the Fed will release its outlook and forecasts, important for gauging the likely impact of Trump’s policies.

Investors worldwide continue to be concerned about the impact of the global trade wars on businesses and profits.

Ethereum

On trading, ethereum rose 2.5% on Coinmarketcap as of 20:20 GMT to $1936.2.

The Australian dollar rose against most major rivals as the risk appetite improved and demand on commodity currencies rallied.

On trading, the AUD/USD pair rose 1% as of 20:07 GMT to 0.6386.

Loonie

The Canadian dollar rose 0.6% against its US counterpart as of 20:07 GMT to 0.700.

US Dollar

The dollar index fell 0.3% as of 19:38 GMT to 103.4, with a session-low at 103.3.

Earlier US data showed retail sales rose 0.2% m/m in February to $722.7 billion.

Analysts now expect the Federal Reserve to hold interest rates unchanged at this week’s policy meeting.

However, the Fed will release its outlook and forecasts, important for gauging the likely impact of Trump’s policies.

Investors worldwide continue to be concerned about the impact of the global trade wars on businesses and profits.