Gold prices rose in European trade on Monday, maintaining gains for the fourth straight session and hovering near three-month highs as the dollar lost ground. 

Recent weak US data bolstered the odds of early US interest rate cuts by the Federal Reserve, with investors awaiting more clues this week.

Gold Prices 

Gold prices rose 0.3% to $2,088 an ounce, with a session-low at $2,079, after rising 1.9% on Friday, the third profit in a row, and the largest in 2024 following weak US data. 

Gold prices rose 2.3% last week, the second weekly profit in a row, and the largest in 2024, as both the dollar and US treasury yields declined.

The Dollar 

The dollar index fell 0.15% on Monday, extending losses for the second session against a basket of major rivals.

US 10-year treasury yields hit two-week lows as the odds of early Fed rate cuts increase. 

Weak Data

Recent Washington data showed US manufacturing slowed down more than expected in February, while Michigan University’s consumer confidence index fell as well. 

US personal spending data clocked in the weakest reading in three years.

 US Rates 

Following the data, the odds of a 0.25% Fed interest rate cut in May came at 25%, while the odds for such a cut in June rose to 73%.

Traders now expect 75 basis points of total Fed rate cuts this year, down from 150 basis points in previous forecasts. 

Investors also await important data this week, including the February payrolls report, and Fed Chair Jerome Powell’s Congressional testimony.  

The SPDR

Gold holdings at the SPDR Gold Trust rose 0.86 tonnes on Friday, the first increase since February 16, to a total of 823.77 tonnes. 

Euro rose in European trade on Monday against a basket of major rivals, extending gains for the second straight session against the dollar following consumer prices data released last week, which showed growing inflationary pressures on the European Central Bank.

Such data hurt the odds of early ECB rate cuts this year, with interest  rates likely remaining at high levels for an extended duration.

EUR/USD

EUR/USD rose 0.2% to 1.0853, with a session-low at $1.0835, after rising 0.3% on Friday, the first profit in four days following European inflation data. 

Euro rose 0.2% against the dollar last week, the second weekly profit in a row following bullish remarks by ECB officials, and strong European data last month.

European Inflation 

Initial data showed eurozone’s consumer prices up 2.6% in February, above estimates of 2.5%, while slowing from 2.8% in the previous reading.

Core prices, excluding food and energy rose 3.1%, above estimates of 2.9%, and down from 3.3% in the previous reading.

The readings show the persistent inflation pressures on the ECB, which hurt the odds of an April rate cut. 

ECB

The ECB is convening on Wednesday and Thursday to discuss monetary policies, widely expected to maintain interest rates unchanged at record 2001 highs.

The meeting is expected to provide fresh clues on the future of European monetary policies and interest rates. 

Oil prices advanced on Friday as investors await OPEC+ decisions on supplies, expected to extend voluntary production cuts for the second quarter of the year.

Reuters sources indeed confirmed that OPEC+ is preparing to extend production cuts potentially to the end of the year, with the decision taken in the first week of March. 

On trading, Brent May futures rose 2%, or $1.64 to $83.55 a barrel, marking a weekly profit of 3.4%.

US crude futures due in April closed 2.2% higher, or $1.71 to $79.97 a barrel, clocking in a weekly profit of 4.55%. 

The dollar declined against most major rivals on Friday following weak data and speculation about Fed policies. 

Recent data showed US personal spending rose 0.3% in January m/m, and 2.4% y/y, slowing down slightly from December.

Core spending rose 0.4% m/m in January, and 2.8% y/y, also slowing from December.

Such data showed that inflation is ever so slightly losing steam in accordance with Fed’s plans. 

 Earlier data today showed the US manufacturing PMI down to 47.8 from 49.1 in January, missing estimates of 49.5. 

A Reuters/Michigan University survey showed the consumer confidence survey down to 76.9 in February from 79.6. 

The Fedwatch tool showed the markets are putting a 57.1% chance of a Fed rate cut in June. 

On trading, the dollar index fell 0.2% to 103.9 as of 20:34 GMT, with a session-high at 104.2, and a low at 103.8. 

Loonie

The Canadian dollar rose 0.1% against its US counterpart as of 21:20 GMT to 0.7375. 

Earlier Canadian data showed the manufacturing PMI at 49.7.

Aussie 

The Australian dollar rose 0.4% against its US counterpart to 0.6524 as of 21:20 GMT.