Gold prices rose in the European market on Wednesday, resuming gains that had paused yesterday amid correction and profit-taking, moving once again near all-time highs as safe-haven buying continues. Gains, however, were capped by the rebound of the US dollar in the foreign exchange market.

A series of weak US labor market data has increased expectations that the Federal Reserve will deliver deeper interest rate cuts. To reprice those expectations, investors are awaiting the release of key US inflation data starting today.

Price Overview

• Gold prices today: Gold rose by 0.6% to ($3,648.49), from the opening level at ($3,626.39), recording the lowest at ($3,620.79).

• At Tuesday’s settlement, gold prices lost 0.3%, marking the first decline in three sessions due to correction and profit-taking, after earlier reaching an all-time high of $3,674.80 per ounce.

US Dollar

The dollar index rose on Wednesday by 0.2%, extending gains for the second consecutive session as the recovery from a seven-week low continues, reflecting the rebound of the US currency against a basket of global counterparts.

In addition to buying from lower levels, the US dollar’s rebound comes ahead of the release of key US inflation data, which will provide decisive evidence on the likelihood of US interest rate cuts in September and October.

Concerns over Federal Reserve stability have eased, especially after President Trump was blocked from dismissing Fed Governor Lisa Cook while the lawsuit remains ongoing in US courts.

US Interest Rates

• Data from the Bureau of Labor Statistics showed payroll numbers were revised down by 911,000 jobs over the twelve months through March. In the preceding twelve months through March 2024, employment was revised lower by 598,000 jobs.

• According to the CME FedWatch tool: the probability of a 25-basis-point rate cut in September is currently priced at 100%, with a 10% chance of a 50-basis-point cut.

• The probability of a 25-basis-point cut in October is also currently priced at 100%, with an 8% chance of a 50-basis-point cut.

• To reaffirm these odds, investors are awaiting key US inflation data throughout this week ahead of next week’s Federal Reserve meeting.

• Later today, producer price data for August will be released, serving as a leading indicator for September’s consumer prices. Consumer price data for August will be released tomorrow, Thursday.

Gold Performance Outlook

• Kyle Rodda, market analyst at Capital.com, said: Sentiment is extremely optimistic. Several key factors are currently supporting gold prices, most importantly expectations of a US interest rate cut.

• Rodda added: The short-term outlook depends heavily on inflation data. If it comes in higher than expected, the odds of a rate cut could slip slightly from the curve, which may trigger a pullback in the gold market that is currently in technically overbought territory.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged yesterday, keeping the total at 979.68 metric tons, the lowest since August 29.

The euro fell in the European market on Wednesday against a basket of global currencies, extending losses for the second consecutive day against the US dollar, moving away from a seven-week high, as correction and profit-taking activity continued, in addition to the rebound of the US currency amid easing concerns over Federal Reserve stability.

Later today, the European Central Bank begins its important monetary policy meeting, where interest rates are expected to remain unchanged for the second consecutive meeting.

Global financial markets are awaiting signals from the ECB on the possibility of resuming the monetary easing cycle during the remainder of this year.

Price Overview

• Exchange rate of the euro today: The euro fell against the US dollar by about 0.2% to ($1.1689), from today’s opening price at ($1.1708), recording the highest level at ($1.1710).

• The euro ended Tuesday’s trading down by about 0.5% against the US dollar, its first loss in the last three days, after earlier recording a seven-week high at $1.1780.

US Dollar

The dollar index rose on Wednesday by 0.2%, extending gains for the second consecutive session, as the recovery from a seven-week low continues, reflecting the rebound of the US currency against a basket of global counterparts.

In addition to buying from lower levels, the US dollar’s rebound comes ahead of the release of key US inflation data, which will provide decisive evidence on the likelihood of US interest rate cuts in September and October.

Later today, producer price data for August will be released, followed by consumer price data on Thursday. Additional hot data would reduce the likelihood of US interest rate cuts.

Concerns over Federal Reserve stability have eased, especially after President Trump was blocked from dismissing Fed Governor Lisa Cook while the lawsuit remains ongoing.

European Central Bank

• The European Central Bank meets later today, Wednesday, and tomorrow, Thursday, to study the appropriate monetary policy for recent economic developments in the euro area.

• The bank is widely expected to keep European interest rates unchanged at the 2.15% range, the lowest level since October 2022, for the second meeting in a row.

• Markets are awaiting further evidence on the timing of the ECB’s resumption of monetary easing and interest rate cuts before the end of this year.

The Japanese yen fell in the Asian market on Wednesday against a basket of major and minor currencies, giving up its highest level in four weeks against the US dollar, as correction and profit-taking activity picked up, in addition to the continued recovery of the US currency ahead of key US inflation data.

Reports indicated that the Bank of Japan sees a chance to normalize monetary policy this year despite political developments in the country, which has boosted the likelihood of a Japanese interest rate hike before the end of the year.

Price Overview

• Exchange rate of the Japanese yen today: The US dollar rose against the yen by about 0.15% to (¥147.58), from today’s opening level at (¥147.41), recording the lowest at (¥147.24).

• The yen ended Tuesday’s trading up by less than 0.1% against the US dollar, its second gain in the last three days, recording the highest level in four weeks at 146.31 yen, supported by hopes of a Japanese interest rate hike.

US Dollar

The dollar index rose on Wednesday by 0.2%, extending gains for the second consecutive session, as the recovery from a seven-week low continues, reflecting the rebound of the US currency against a basket of global currencies.

In addition to buying from lower levels, the US dollar’s rebound comes ahead of the release of key US inflation data, which will provide decisive evidence on the likelihood of US interest rate cuts in September and October.

Later today, producer price data for August will be released, followed by consumer price data on Thursday. Additional hot data would reduce the likelihood of US interest rate cuts.

Japanese Interest Rates

• Reports suggest the Bank of Japan sees a chance to raise interest rates this year despite the country’s political developments.

• Following the above reports, market pricing of a 25-basis-point interest rate hike by the Bank of Japan at the September meeting rose from 30% to 35%.

• Traders currently expect Japanese interest rates to reach the 0.75% range before year-end, implying strong odds of an additional 25-basis-point increase during the remainder of this year.

• To reprice those odds, investors are awaiting more data on inflation, unemployment, and wages in Japan, as well as remarks from some Bank of Japan members.

Gold prices rose during Tuesday’s trading and reached a new record high. After surpassing the $3,600 per ounce barrier yesterday, US futures for the precious metal achieved another historic milestone today by breaking above the $3,700 per ounce level.

On the back of these gains, the yellow metal has extended a rally that has lifted its value by more than 90% since late 2022. Demand is expected to remain strong in the coming period, driven by a combination of factors outlined in the following report.

Will Central Banks Continue Buying?

Net annual central bank purchases have exceeded 1,000 metric tons per year since 2022, according to consultancy Metals Focus, which expects 900 tons of purchases this year — double the annual average of 457 tons during 2016–2021.

Emerging economies are seeking to diversify reserves away from the dollar, after Western sanctions froze about half of Russia’s official foreign exchange reserves in 2022.

Official figures reported to the International Monetary Fund account for only 34% of estimated central bank demand in 2024, according to the World Gold Council (WGC).

These purchases represented 23% of total annual gold demand between 2022–2025, double the share recorded in the 2010s.

Will Jewelry Demand Keep Falling?

Gold demand for jewelry — the primary source of physical demand — fell 14% to 341 tons in the second quarter of 2025, the lowest since the pandemic-hit third quarter of 2020, according to the WGC.

High prices were the main driver, particularly in China and India, where their combined share of the global market dropped below 50% for only the third time in five years.

Metals Focus estimated that gold jewelry fabrication fell 9% to 2,011 tons in 2024 and is expected to record a further 16% decline this year.

Are People Still Buying Bars and Coins?

A major shift has occurred in investor appetite for different retail products, but overall demand has remained strong.

Demand for gold bars rose 10% in 2024, while purchases of gold coins fell 31%, according to the WGC.

This trend has continued in 2025, with Metals Focus forecasting physical net investment to rise 2% this year to 1,218 tons, supported by higher demand in Asia amid positive price expectations.

Can Gold ETFs Attract More Inflows?

Exchange-traded funds (ETFs) have become a more important source of demand this year, recording inflows of 397 tons between January and June — the largest first-half inflows since 2020, according to the WGC.

Total ETF holdings reached 3,615.9 tons by the end of June, the highest since August 2022. The all-time high was 3,915 tons five years ago.

Metals Focus expects net investment in gold-backed ETFs to reach about 500 tons in 2025, after recording outflows of 7 tons in 2024.