Gold prices fell in European trade on Wednesday, resuming losses and about to hit a two-week trough on weak haven demand as US-China trade tensions diminished. 

The losses are stymied by the dollar’s decline against a basket of major rivals as traders await more data and official remarks to provide clues on the future path of Fed interest rates.

The Price

Gold prices fell 0.9% today to $3221.84 an ounce, with a session-high at $3257.

On Tuesday, gold rose 0.45% away from two-week lows at $3207.

Trade Tensions 

The US said it’ll reduce tariffs on low-cost Chinese shipments, worth less than $800, to 30%, reducing the severity of the trade war even further.

On Monday, President Trump said he doesn’t expect tariffs on Chinese goods will return to 145% after the 90-day pause, adding he expects to reach a final deal with Beijing.

US Dollar

The dollar index fell 0.55% on Wednesday, away from five-week highs against a basket of major rivals.

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

US Rates

Recent US inflation data missed estimates, showing reduced inflationary pressures on Fed policymakers.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in June stood at just 8%, and the odds of such a cut in July stood at 40%.

Traders are now pricing in 50 basis points of US interest rate cuts this year, likely starting next September.

SPDR

Gold holdings at the SPDR Gold Trust fell 2.58 tons yesterday to a total of 936.51 tons, the lowest since April 8.

The euro rose in European trade on Wednesday against a basket of major rivals, extending gains for the second straight session against the dollar and recovering from a five-month trough.

Recent European inflation data changed the odds of an ECB interest rate cut in July, as traders await more data this week to gather additional clues.

The odds of at least two US interest rate cuts this year surged after  weak inflation data for April.

The Price

The EUR/USD price rose 0.15% today to $1.1201, with a session-high at $1.1179.

The pair rose 0.9% on Tuesday away from a five-week trough at $1.1065, and after weak US data.

European Rates

Recent eurozone data showed inflation rose past estimates in April, renewing inflationary pressures on the European Central Bank’s policymakers.

The data tanked the odds of an ECB interest rate cut in June from 60% to below 50%.

US Rates

Recent US inflation data missed estimates, showing reduced inflationary pressures on Fed policymakers.

Traders are now pricing in 50 basis points of US interest rate cuts this year, starting next September.

The Australian dollar rose in Asian trade on Wednesday against a basket of major rivals, expanding gains for the second straight session against the US dollar and hitting a week high, while approaching five-week highs following strong Australian wages data. 

The data renewed inflationary pressures on the Reserve Bank of Australia’s policymakers, which hurt the odds of a rate cut in May.

The Price

The AUD/USD price rose 0.3% today to $0.6487, the highest in a week, with a session-low at $0.6465.

The Aussie rose 1.55% on Tuesday against the greenback, marking the biggest profit since April 9, and approaching a five-month high at 65.15 cents.

Australian Wages

Earlier Sydney data showed Australian wages rose 3.4% y/y in the first quarter of 2025, compared to the previous quarter’s 3.2% rise, and passing estimates of a 3.2% increase.

On a quarterly basis, the seasonally-adjusted wages grew 0.9% in the first quarter, up from a 0.7% increase in the previous quarter.

Australian Rates

The wages data renewed inflationary pressures on the RBA policymakers before the May 20 meeting.

The RBA held interest rates unchanged at 4.1% at the previous April meeting but opened the door for a May rate cut.

The current odds of such a rate cut by the RBA in May currently stand at 75%.

The recent reduction of global trade tensions led analysts to reduce their expectations for Australian rate cuts this year.

The markets now expect the RBA to cut rates to 3.1% by the end of the year, up from 2.85% in previous forecasts.

Political Developments

Australia is enjoying political stability as the current Prime Minister Anthony Albanese gets sworn in for a second term, maintaining all major government positions unchanged.

Albanese is scheduled to attend Pope Leo XIV’s inauguration in Rome on Sunday, and there he will meet the European Commission President Ursula von der Leyen to discuss trade relations.

Most cryptocurrencies rallied on Tuesday as the risk appetite improved following the US-China trade deal.

Earlier data showed US consumer prices rose 2.3% y/y in April, down from 2.4% in March, and below estimates of 2.4%.

US core prices, excluding food and energy, rose 2.8% in April, same as March and matching estimates.

US consumer prices rose 0.2% m/m in April, below estimates of a 0.3% rise, and compared to March's 0.1% contraction.

The US and China announced a massive cut in reciprocal tariffs for 90 days amid efforts to contain trade tensions and reach a resolution.

According to the temporary agreement, the US will cut tariffs from 145% to 30%, including a 20% tariff related to fentanyl, while China will cut tariffs from 125% to 10%.

In addition, Trump also reduced tariffs on small Chinese packages, worth less than $800, from 120% to 54%.

Ethereum

Ethereum spiked 8.4% as of 21:18 GMT on Coinmarketcap to $2663.5, while rising 49.5% overall in the past seven days.