Gold prices rose in European trading on Friday, moving into positive territory for a second consecutive session, supported by the current weakness in the US dollar against a basket of global currencies as markets price in a high probability of a Federal Reserve rate cut next week.

To reprice those expectations, investors are awaiting the long-delayed US Personal Consumption Expenditures report later today, which had been postponed due to the government shutdown.

The PCE report is the Federal Reserve’s preferred inflation gauge.

Price Overview

• Gold today: Prices rose by 0.55% to $4230.81, from an opening at $4207.44, after touching a low of $4194.85.

• On Thursday, gold settled up 0.1%, resuming gains after a two-day pause caused by profit-taking from the six-week high at $4264.60 per ounce.

US Dollar

The dollar index declined on Friday by 0.25%, resuming losses after a brief pause yesterday and moving close to a five-week low, reflecting continued weakness in the US currency against major global peers.

US Interest Rates

• A stream of weak US economic data continues, particularly regarding job openings in the world’s largest economy.

• Fed officials, including New York Fed President John Williams and Governor Christopher Waller, signaled that easing policy in December may be justified given labor-market weakness.

• Kevin Hassett — now the leading candidate to replace Jerome Powell — stated that interest rates should be lower.

• According to CME’s FedWatch tool, markets currently price an 87% probability of a 25 basis-point rate cut in December, with a 13% chance of no change.

• To reprice these expectations, investors await today’s release of the September PCE report, a key inflation measure closely watched by the Federal Reserve.

Gold Outlook

Kelvin Wong, market analyst for Asia-Pacific at Oanda, said sellers were unable to push gold above Monday’s peak at $4264.60, while the market shows signs of caution ahead of the PCE release.

He added that this pivotal data is pushing short-term traders toward a more defensive stance in adding long positions, with dollar weakness now offering support to gold.

SPDR Holdings

Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, rose on Thursday by 4.00 metric tons to 1,050.58 metric tons — the highest level since October 22.

The euro rose in European trading on Friday against a basket of global currencies, resuming the gains that paused yesterday against the US dollar. The currency is now approaching a seven-week high and heading toward a second consecutive weekly advance.

This week’s data from the eurozone showed a clear expansion in business activity during November, signaling an acceleration in economic growth through the fourth quarter. The improvement in Europe’s outlook is boosting market confidence in the region’s ability to exit its phase of economic weakness and is paving the way for potentially more hawkish decisions from the European Central Bank in upcoming meetings.

Price Overview

• EUR/USD Today: The euro climbed 0.1% to 1.1656, from an opening at 1.1644, after touching a low of 1.1674.

• The euro ended yesterday down 0.25% against the dollar — its first loss in four days — as investors booked profits following a run-up to a six-week high at 1.1682 earlier in the session.

Weekly Trading

So far this week — which concludes with today’s settlement — the euro is up more than 0.5% against the US dollar, putting it on track to achieve a second straight weekly gain.

Positive Data

Wednesday’s figures showed eurozone business activity rising at its fastest pace in two and a half years during November, with a strong services sector offsetting relative weakness in manufacturing.

Views and Analysis

Steve Englander, head of global FX research at Standard Chartered in New York, said: “We’ve been seeing this gradual improvement in Europe’s data, and I think the market is finally starting to take notice.”

He added that optimism over a potential end to the Russia–Ukraine war is also supporting gains in many European currencies, particularly the euro and the British pound.

Christine Lagarde

In a session before the European Parliament’s Committee on Economic and Monetary Affairs, ECB President Christine Lagarde said on Wednesday that Europe’s economy is showing signs of recovery: household spending has increased, and the labor market remains resilient — both contributing to improved activity despite ongoing challenges.

Lagarde emphasized that core inflation indicators remain aligned with the ECB’s 2% medium-term target and is expected to stay near that level in the coming months.

European Interest Rates

• This week’s data showed an unexpected rise in headline inflation across the eurozone for November, highlighting persistent price pressures for the ECB.

• Following the inflation release, money-market pricing for a 25-basis-point ECB rate cut in December fell sharply from 25% to just 5%.

• Reuters sources indicated the ECB is likely to hold rates steady in its December meeting.

• Investors await additional eurozone economic data ahead of the December 17–18 meeting to reassess these expectations.

The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, extending gains for a third consecutive session against the US dollar. The currency is now trading near a two-week high and is on track to secure another weekly gain — its largest weekly advance since September — supported by growing expectations of an interest-rate hike in Japan later this month.

More hawkish remarks from Bank of Japan Governor Kazuo Ueda opened the door to near-term policy normalization, coinciding with Reuters reports citing government sources that the central bank is likely to raise rates in December.

Price Overview

• USD/JPY Today: The dollar fell about 0.2% against the yen to 154.80¥, from an opening level of 155.05, after touching a high of 155.23.

• The yen ended Thursday up 0.1% against the dollar, marking a second straight daily gain and reaching a two-week high of 154.51, supported by hopes that the interest-rate gap between Japan and the US will narrow.

Weekly Trading

So far this week — which concludes with today’s settlement — the Japanese yen is up roughly 0.85% against the US dollar, on track for a second consecutive weekly gain and its strongest weekly performance since late September.

Kazuo Ueda

On Monday, BOJ Governor Kazuo Ueda offered a more optimistic outlook for Japan’s economy, saying the central bank will weigh the pros and cons of raising interest rates at its upcoming December policy meeting.

Japanese Finance Minister Satsuki Katayama said on Friday, in response to a question on monetary policy: since taking office in October, communication with Governor Ueda has been very strong. She added that the specifics of monetary operations fall strictly under the BOJ’s authority.

Views and Analysis

Christopher Wong, FX strategist at OCBC, said: “This looks like pre-positioning for a possible rate hike. A December or January move now seems highly plausible.”

He added: “The key question is whether this will be a one-and-done increase followed by another long pause. A sustained recovery in the yen will likely require stronger forward guidance from the BOJ.”

Japanese Interest Rates

• Reuters sources said the BOJ is preparing markets for a potential rate hike in December, returning to a more hawkish tone as concerns about the yen’s sharp decline re-emerge and political pressure to keep rates low fades.

• Three government officials told Reuters the BOJ will *likely* raise interest rates this month.

• Market pricing currently assigns roughly a 70% probability of a 25-basis-point rate hike at the December meeting.

• To refine these expectations, investors are awaiting further Japanese data on inflation, unemployment, and wage growth.

The US dollar rose against most major currencies on Thursday following economic data that strengthened expectations the Federal Reserve will likely cut interest rates at its meeting next week.

Government figures released today showed that initial jobless claims fell by 27,000 to 191,000 last week, compared with expectations of 220,000.

According to Challenger, Gray & Christmas, announced job cuts in the US totaled 71.3 thousand in November.

Markets now await Friday’s release of the Personal Consumption Expenditures Index, the Fed’s preferred gauge of inflation.

Based on CME Group’s FedWatch Tool, expectations point to nearly an 89% probability of a rate cut at the upcoming meeting.

In trading, the dollar index edged higher by less than 0.1% to 98.9 points at 18:42 GMT, after hitting a high of 99.03 and a low of 98.7.

Australian Dollar

The Australian dollar rose 0.2% against its US counterpart to 0.6616 at 18:53 GMT.

Canadian Dollar

The Canadian dollar held steady at 0.7168 against the US dollar at 18:53 GMT.