Gold prices retreated in the European market on Thursday, moving into negative territory under pressure from the continued recovery of the US dollar against a basket of major global currencies, ahead of the release of key US inflation data.

Those data are expected to provide strong clues about the future path of Federal Reserve monetary policy in 2026, especially as markets currently price in two US interest rate cuts next year.

Price Overview

Gold prices today: Gold prices fell by around 0.4% to $4,322.23, from an opening level of $4,338.37, after recording an intraday high at $4,343.31.

At Wednesday’s settlement, gold prices rose by 0.8%, resuming gains that had paused the previous day amid correction and profit-taking activity from a two-month high at $4,353.59 per ounce.

US Dollar

The US Dollar Index rose by 0.2% on Thursday, maintaining gains for a second consecutive session, reflecting the continued recovery of the US currency against a basket of global currencies.

This positive performance comes ahead of central bank decisions in Europe and the UK, where European interest rates are expected to remain unchanged, while UK rates are seen being cut by around 25 basis points.

US Interest Rates

Federal Reserve Governor Christopher Waller said the central bank still has room to cut interest rates amid a cooling labor market.

US President Donald Trump said the new Federal Reserve chair will believe in significantly lower interest rates.

Following these comments, CME FedWatch pricing showed that expectations for keeping US interest rates unchanged at the January 2026 meeting declined from 80% to 72%, while expectations for a 25 basis point rate cut rose from 20% to 28%.

Investors are currently pricing in two US interest rate cuts next year, while the Federal Reserve’s own projections point to a single 25 basis point cut.

US Inflation Data

To reassess these expectations, traders are awaiting the release of key US inflation data for November later today, which are expected to influence the Federal Reserve’s monetary policy path in 2026.

Gold Outlook

Kelvin Wong, Market Analyst for Asia Pacific at OANDA, said that Waller’s comments suggest the Federal Reserve may maintain the current rate-cut cycle, which supports both gold and silver at present. Wong added that some profit-taking could emerge at current levels.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, increased by about 0.85 metric tons on Wednesday, lifting total holdings to 1,052.54 metric tons.

The British pound retreated in European trading on Thursday against a basket of global currencies, extending its losses for the second consecutive day against the US dollar and moving away from a two-month high, amid continued correction and profit-taking activity, in addition to pressure from the stronger US currency ahead of the release of key US inflation data for November.

UK government data showed that British inflation slipped to its lowest level in eight months in November, easing inflationary pressures on Bank of England policymakers. This comes as markets await the central bank’s decision later today, with full expectations of a fresh cut in UK interest rates.

Price Overview

• British pound exchange rate today: the pound fell against the dollar by 0.1% to $1.3362, from an opening level of $1.3376, recording a high of $1.3382.

• The pound lost 0.35% against the dollar on Wednesday, marking its first loss in three days, due to correction and profit-taking, after posting a two-month high the previous day at $1.3456.

• Beyond profit-taking sales, the pound also weakened following the release of UK inflation data that were less aggressive than market expectations.

US Dollar

The US dollar index rose by 0.1% on Thursday, maintaining its gains for the second consecutive session, reflecting continued recovery in the US currency against a basket of global currencies.

This positive performance comes ahead of central bank decisions in Europe and Britain, where European interest rates are expected to remain unchanged, while UK interest rates are expected to be cut by about 25 basis points.

Later today, key US inflation data for November will be released, which are expected to provide strong clues about the path of Federal Reserve interest rates in 2026.

The dollar also welcomed remarks by US President Donald Trump, who said that the next Federal Reserve chair would believe in cutting interest rates “significantly.”

UK Inflation

The Office for National Statistics said on Wednesday that headline UK inflation rose by 3.2% year-on-year in November, the slowest pace since March, below market expectations of a 3.5% increase, compared with a 3.6% reading in October.

Core inflation rose by 3.2% in November, also below market expectations of 3.4%, compared with a 3.4% reading in October.

The sharp slowdown in UK prices reduces inflationary pressures on Bank of England policymakers and strongly reinforces expectations for continued monetary easing and further UK interest rate cuts.

UK Interest Rates

Following the data, market pricing for a 25 basis point rate cut by the Bank of England at today’s meeting rose from 90% to 100%.

Bank of England

The Bank of England is set to conclude later today its final monetary policy meeting of 2025, where UK interest rates are expected to be cut by about 25 basis points to a range of 3.75%, the lowest level since December 2022, marking the fourth UK monetary easing move this year.

The interest rate decision, policy statement, and the voting outcome of the Monetary Policy Committee will be released at 12:00 GMT.

Bank of England Governor Andrew Bailey will speak at a press conference at 12:30 GMT, commenting on the outcome of the policy meeting, inflation developments, and the outlook for interest rates.

Outlook for the British Pound

At Economies.com, we expect that if the Bank of England and Andrew Bailey deliver less aggressive comments than markets anticipate, the probability of multiple UK interest rate cuts in 2026 will increase, leading to further downside pressure on the British pound.

The Japanese yen retreated in Asian trading on Thursday against a basket of major and minor currencies, extending its losses for the second consecutive day against the US dollar, moving away from a two-week high amid ongoing correction and profit-taking activity, in addition to pressure from the stronger US currency ahead of the release of key US inflation data for November.

Later today, the final monetary policy meeting of the Bank of Japan for 2025 will begin, with decisions set to be announced on Friday. Markets widely expect a 25 basis point hike in Japanese interest rates, marking the second tightening move this year.

Price Overview

• Japanese yen exchange rate today: the dollar rose against the yen by 0.1% to ¥155.81, from an opening level of ¥155.64, recording a low of ¥155.42.

• The yen ended Wednesday’s session down 0.6% against the dollar, marking its first loss in three days, due to correction and profit-taking from a two-week high at ¥154.39.

US Dollar

The US dollar index rose by 0.1% on Thursday, maintaining its gains for the second consecutive session, reflecting the continued recovery of the US currency against a basket of global currencies.

This positive performance comes ahead of central bank decisions in Europe and Britain, where European interest rates are expected to remain unchanged, while UK interest rates are expected to be cut by about 25 basis points.

Later today, key US inflation data for November will be released, which are expected to provide strong clues about the path of Federal Reserve interest rates in 2026.

The dollar also welcomed remarks by US President Donald Trump, who said that the next Federal Reserve chair would believe in cutting interest rates “significantly.”

Bank of Japan

Later today, the Bank of Japan begins its policy meeting to discuss appropriate monetary policy for developments in the world’s fourth-largest economy, amid strong expectations of a 25 basis point rate hike to a range of 0.75%, the highest level since 2008 during the global financial crisis.

Markets are closely watching what Governor Kazuo Ueda will say about the direction of monetary policy in 2026, at a time when expectations are rising that the Japanese government may resort to further expansionary fiscal measures, adding complexity to the Bank of Japan’s policy outlook.

Japanese Interest Rates

• Following recent inflation and wage data in Japan, market pricing for the probability of a quarter-percentage-point rate hike at this week’s meeting has stabilized above 90%.

• Bank of Japan Governor Kazuo Ueda recently offered more optimistic expectations for the Japanese economy, saying the central bank would assess the pros and cons of raising interest rates at its upcoming policy meeting.

• Three government officials told Reuters that the Bank of Japan is likely to raise interest rates in December.

Views and Analysis

Analysts at Société Générale said they expect the Bank of Japan to raise interest rates to 1% by July next year, while also expecting the bank to deliver a rate hike when it announces its policy decision on Friday.

Thierry Wizman, global head of foreign exchange and interest rate strategy at Macquarie, said the Bank of Japan’s move comes in response to inflationary pressures linked to a weak yen, as well as a new political willingness to address what he described as a “cost-of-living crisis” in Japan.

Wizman added that they are more optimistic on the Japanese yen than on other currencies, and expect the dollar/yen pair to move toward 146 by the end of 2026.

Silver recently recorded a new all-time high at $64 per ounce. While gold has continued to outperform the white metal as a store of value, Deutsche Welle examines why silver is once again gaining growing global importance.

What happened to silver prices in 2025?

Silver has experienced a powerful rally, with prices more than doubling from around $30 per ounce (€24.54) at the start of the year to a record high of $64.65 per ounce on December 12.

The metal was trading near $30 on COMEX, the commodities arm of the New York Mercantile Exchange (NYMEX), in January. It then moved within a $37–$40 range throughout the summer before decisively breaking higher in September.

The pace of gains accelerated thereafter, with the strongest advances recorded during the final three months of the year.

The roughly 110% rise since the start of the year marks a dramatic turnaround for silver, long viewed as gold’s “poor cousin,” as gold typically outperforms during bullish markets.

Despite warnings from some investors about the potential for a short-term price correction, sentiment toward silver remains broadly positive heading into next year.

Prior to 2025, silver spent most of the past decade trading between $15 and $25 per ounce, with occasional spikes above $30 during periods of speculative enthusiasm, but it failed to sustain lasting upside momentum.

Even at its previous peaks in 1980 and 2011, silver reached around $49 per ounce, well below gold’s rallies above $1,900 per ounce.

This year, however, gold has lagged silver in relative terms, rising by about 60% to roughly $4,340 per ounce, compared with silver’s more-than-doubling.

Silver’s break to record levels has been partly driven by a weaker US dollar and expectations of interest rate cuts by the Federal Reserve, which tend to enhance the appeal of precious metals as safe-haven assets.

More significant drivers, however, have played a decisive role, most notably tightening global supply as production struggles to keep pace with demand.

What challenges does silver production face?

Latin America, which accounts for more than half of global silver output, is facing declining production as mines age and reserves are depleted.

Mexico, responsible for around 25% of global supply, has recorded double-digit production declines in recent years.

One of the country’s largest mines, San Julian in northern Chihuahua state, is approaching the end of its operational life by 2027. The mine is a key asset for Fresnillo, but ore quality is deteriorating and reserves are being exhausted.

At the same time, Peru, Bolivia, and Chile, which together provide roughly one-third of global silver supply, are experiencing falling ore grades, making extraction more costly and less efficient.

These countries are also grappling with political instability and stricter mining regulations, which have discouraged fresh investment in the sector.

According to analysts at London-based GlobalData, silver production in Latin America is expected to stagnate or begin declining by the end of the decade unless new deposits are discovered or supportive policies are introduced.

Meanwhile, the silver market has been in a structural deficit for a fifth consecutive year, according to the Silver Institute.

The institute estimates that global demand will exceed supply by around 95 million ounces this year.

Why is demand for silver increasing?

Demand for silver is rising not only because it is viewed as a store of value, but also because it has become a critical component in modern technology and clean energy.

Its unique properties, including the highest electrical and thermal conductivity of any metal, make it indispensable for fast-growing global industries.

Solar panels, for example, rely on silver paste to conduct electricity, and as governments push toward renewable energy targets, demand from the solar sector is expected to rise sharply.

Electric vehicles require up to two-thirds more silver than internal combustion engine vehicles, as the metal is used in batteries, wiring, and charging infrastructure, reinforcing silver’s role in the future of green transportation.

Silver is also playing an increasingly important role in the digital economy. Artificial intelligence chips and data centers rely on silver to ensure highly efficient electrical circuits, where speed and reliability are critical.

Silver’s ability to handle large electrical loads helps maintain signal integrity and stable performance at scale, while its high thermal conductivity aids in dissipating intense heat generated by AI workloads.

Despite declining use in coins and bullion, other traditional applications such as jewelry, electronics, medical devices, and consumer goods remain strong.

The Silver Institute expects global industrial demand for silver to continue growing steadily over the next five years.

Oxford Economics said this month that silver demand from the automotive sector will grow at an annual rate of 3.4% through 2031, and that the metal will benefit from a projected 65% increase in US data center construction over the same period.

What is silver’s historical role as money?

For thousands of years, silver has been trusted as a medium of exchange and a store of value. Ancient civilizations used it in trade due to its rarity, durability, and divisibility.

Silver’s importance expanded after European colonizers discovered vast deposits in Latin America, helping it become a metal of everyday transactions.

Spanish pieces of eight, silver coins worth eight reales, became the world’s first global trading currency, circulating from the Americas to Europe and Asia.

In the 19th century, many countries, including the United States and the United Kingdom, pegged their currencies to both gold and silver. The term “pound sterling” originally referred to a pound of silver.

Silver lost its monetary role in the 20th century as countries abandoned the silver standard. Central banks retained gold, while silver was increasingly directed toward industrial uses.

Nevertheless, silver has preserved its reputation as a hedge against inflation and financial turmoil, a legacy rooted in its long history as everyday money.