Gold prices rose in the European market on Thursday, resuming gains after pausing yesterday, and moving closer to all-time highs. The advance came as the US dollar halted its climb against a basket of major currencies.

With Federal Reserve officials adopting a more cautious tone, the likelihood of two US interest rate cuts before the end of this year has diminished. To reprice those expectations, investors await key US economic data later today.

Price Overview

• Gold prices rose by about 0.7% to $3,761.66, from the opening level of $3,736.06, after hitting a low of $3,729.62.

• On Wednesday, gold settled down by 0.75%, marking the first loss in four sessions, as profit-taking pulled it back from an all-time high of $3,791.13 an ounce.

US Dollar

The dollar index fell by 0.1% on Thursday, retreating from a two-week high of 97.92 points, reflecting the pause in the US currency’s advance against major counterparts.

Beyond profit-taking, the US dollar weakened as investors avoided building additional long positions, preferring to wait for further clues on the Fed’s interest rate path.

US Interest Rates

• Fed Chair Jerome Powell said on Tuesday that the central bank will continue to balance concerns about a weakening labor market with mounting worries about inflation.

• According to the CME FedWatch tool, the probability of a 25-basis-point rate cut at the October meeting is currently priced at 92%, while the chance of leaving rates unchanged stands at 8%.

• Investors are awaiting key US data later today, including second-quarter GDP and weekly jobless claims, to reassess these expectations.

Outlook for Gold

Brian Lan, managing director of Singapore-based GoldSilver Central, said: “I don’t think inflation data will have much of an impact on gold unless it’s exceptionally high.” He added: “From our quantitative market view, the long-term outlook remains very positive.”

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.72 metric tons on Wednesday, bringing the total to 996.85 metric tons, down from 1,000.57 metric tons — the highest level since August 3, 2022.

The Swiss National Bank announced its interest rate decision on Thursday morning, following the September 25 meeting. The bank kept rates unchanged at 0.00%, the lowest level since June 2022, in line with market expectations. This marks a temporary pause in the monetary easing cycle, which had continued over the past six consecutive meetings.

• This statement is “positive” for the Swiss franc.

The Swiss franc rose in European trading on Thursday against a basket of global currencies, resuming gains against the U.S. dollar as the greenback’s rally paused ahead of key U.S. economic data releases.

The franc’s advance, however, remains limited, with investors refraining from building large positions ahead of the Swiss National Bank’s (SNB) policy decision, where rates are widely expected to remain unchanged.

Price Overview

USD/CHF today: the dollar slipped 0.1% to 0.7938 francs, down from the opening level of 0.7947, after touching a high of 0.7951.

The franc ended Wednesday down about 0.5% against the dollar, snapping a three-day winning streak, after cautious remarks from some Federal Reserve policymakers.

U.S. Dollar

The U.S. dollar index fell 0.1% on Thursday, retreating from a two-week high of 97.92, reflecting a pause in the dollar’s upward momentum against global currencies.

Beyond profit-taking and corrections, the dollar is easing ahead of key U.S. releases on Q2 GDP growth and weekly jobless claims. These data are expected to provide clearer signals on whether the Federal Reserve will continue cutting rates in the remainder of the year, particularly after the cautious tone expressed by Fed officials.

Swiss National Bank

The SNB concludes its regular policy meeting to assess economic conditions, with markets expecting no change in rates, which remain at 0.00%.

This decision would mark a pause in the monetary easing cycle that began in September 2023 and continued through the June meeting, coming against a backdrop of mounting inflationary pressures, especially from external factors.

The policy rate decision is due at 08:30 GMT, followed by remarks from the SNB Chairman and other officials at a press conference at 09:00 GMT.

Outlook for the Swiss Franc

Here at Economies.com, we expect the franc to continue rising against the U.S. dollar if the SNB delivers comments and projections that are more hawkish than markets currently anticipate.

The Japanese yen rose in Asian trading on Thursday against a basket of major and minor currencies, attempting to recover from a three-week low against the U.S. dollar. The move came on the back of bargain buying from lower levels, supported by a pause in the dollar’s rally ahead of key U.S. data releases.

Expectations for a Bank of Japan rate hike in October declined after less aggressive comments from Governor Kazuo Ueda, as markets await further evidence on the path of monetary policy normalization in the world’s fourth-largest economy.

Price Overview

USD/JPY today: the dollar fell by 0.15% to ¥148.56, down from the opening level of ¥148.89, after touching a high of ¥148.90.

The yen ended Wednesday down 0.85% against the dollar, snapping a three-day winning streak, and hitting a three-week low at ¥148.92 amid political uncertainty in Japan.

U.S. Dollar

The U.S. dollar index slipped 0.1% on Thursday, retreating from a two-week high of 97.92, reflecting a pause in the greenback’s rally against global currencies.

Beyond profit-taking and corrective moves, the dollar is easing ahead of key U.S. data on Q2 economic growth and weekly jobless claims. These figures are expected to provide clearer signals on whether the Federal Reserve will continue cutting rates through the remainder of the year, particularly after the cautious remarks from Fed officials regarding the policy outlook.

Japanese Interest Rates

Governor Kazuo Ueda said Friday that policymakers must closely monitor the impact of trade policies on financial markets, foreign exchange, the economy, and prices in Japan.

He added that the Bank of Japan will continue raising rates if the economy and inflation evolve in line with expectations, supported by improving conditions.

Following Ueda’s comments, market pricing for a 25-basis-point rate hike in October dropped from 75% to below 50%.

Investors now await further data on inflation, unemployment, and wages in Japan to reassess those odds.