Gold prices rose in European trading on Wednesday, resuming gains that paused temporarily yesterday, and moving back into positive territory near a two-week high, supported by the current decline in the US dollar.

Later today, key US labor market data will be released, namely the January jobs report, which is expected to provide strong clues about the path of Federal Reserve interest rates this year.

Price overview

Gold prices today: Gold rose by 0.95% to $5,072.19, from an opening level of $5,025.48, with a session low recorded at $5,025.48.

At Tuesday’s settlement, gold fell by 0.7%, marking its first daily loss in the past three sessions, within a corrective pullback and profit-taking move.

US dollar

The dollar index fell by 0.35% on Wednesday, hitting a two-week low at 96.57, reflecting weaker performance of the US currency against a basket of major and minor currencies.

A weaker US dollar makes dollar-denominated gold bullion more attractive for holders of other currencies.

The dollar’s decline comes after weaker-than-expected US retail sales data strengthened expectations that the Federal Reserve may ease monetary policy and cut interest rates at least twice this year.

US interest rates

San Francisco Federal Reserve President Mary Daly said on Friday that one or two additional rate cuts may be necessary to address weakness in the labor market.

According to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting stands at 79%, while the probability of a 25-basis-point rate cut is priced at 21%.

US jobs data

To reprice the above expectations, markets are awaiting later today the monthly US jobs report, which will include key labor market figures, especially nonfarm payrolls, along with the unemployment rate and average hourly earnings.

Nonfarm payroll data is due at 13:30 GMT. Expectations point to the US economy adding 66,000 jobs in January, up from 50,000 in December, with the unemployment rate steady at 4.4%, and average hourly earnings expected to rise by 0.3%.

Gold outlook

Carsten Menke, analyst at Julius Baer, said the recent slight weakening in the US dollar helped support gold and is likely to lift prices today.

Giovanni Staunovo, analyst at UBS, said expectations for slower US job growth, to be confirmed later today, support the view that the Federal Reserve will continue cutting interest rates this year.

SPDR fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, fell on Tuesday by about 0.34 metric tons, bringing total holdings down to 1,079.32 tons.

The euro rose in European trading on Wednesday against a basket of global currencies, resuming gains that had briefly paused versus the US dollar, supported by the greenback’s fall to a two-week low, ahead of the release of key US labor market data.

European Central Bank President Christine Lagarde downplayed the impact of the euro exchange rate on the monetary policy path, saying the currency’s recent rise has already been incorporated into current inflation forecasts.

Price Overview

• Euro exchange rate today: The euro rose against the dollar by 0.2% to $1.1918, from an opening level of $1.1895, and recorded a session low of $1.1886.

• The euro ended Tuesday down more than 0.15% versus the dollar, its first loss in three days, due to correction and profit-taking activity, after earlier hitting a two-week high of $1.1928.

US Dollar

The dollar index fell 0.35% on Wednesday, recording a two-week low at 96.57 points, reflecting broad weakness in the US currency against a basket of major and minor currencies.

The decline followed weaker-than-expected US retail sales data, which boosted expectations that the Federal Reserve may ease monetary policy and cut interest rates at least twice this year.

To reprice those expectations, traders are awaiting later today the US January jobs report, which was postponed from Friday due to the temporary US government shutdown.

Christine Lagarde

Following the European Central Bank’s monetary policy meeting last week, President Christine Lagarde downplayed concerns about the euro–dollar exchange rate’s impact on the bank’s policy path, stressing that recent currency moves do not represent a material shift that would require a policy adjustment.

Lagarde said the euro has risen recently but remained within expected ranges, and that the effects of this rise have already been factored into current inflation projections, emphasizing that monetary policy will remain primarily data-dependent rather than driven by exchange rate volatility alone.

She added that the ECB is closely monitoring the euro’s exchange rate, noting that the strength of the single currency helps curb imported inflation and could speed progress toward targets without the need for additional tightening.

European Interest Rates

• Money markets are pricing the probability of a 25-basis-point rate cut by the European Central Bank in March at below 30%.

• To reprice those probabilities, investors are awaiting further eurozone data on inflation, unemployment, and wages.

The Japanese yen rose broadly in Asian trading on Wednesday, extending its gains against a basket of major and minor currencies and posting a third straight daily advance versus the US dollar, reaching a two-week high, supported by easing financial concerns in Japan.

Traders are betting that Prime Minister Sanae Takaichi’s landslide parliamentary election victory puts her in a strong position to pursue more fiscally responsible policies and gives her greater ability to contain downside pressure in the government bond market.

Price Overview

• The Japanese yen exchange rate today: The dollar fell against the yen by 0.7% to ¥153.26, the lowest level since January 30, from an opening level of ¥154.37, and recorded a session high of ¥154.52.

• The yen ended Tuesday up about 1.0% against the dollar, marking a second consecutive daily gain, amid the impact of the ruling party’s landslide election victory led by Sanae Takaichi.

Financial Concerns

Takaichi’s decisive victory gave investors greater confidence in her ability to push growth-supporting fiscal policies and ease cost-of-living pressures, while at the same time using stimulus tools in a more disciplined way.

Expectations that Takaichi will adopt more coherent economic policies have helped reduce financial concerns and strengthen confidence in the broader economic path, with stimulus measures seen as more aligned with deficit control and debt containment.

Views and Analysis

• Vishnu Varathan, Head of Macro Research at Mizuho, said such a landslide win gives the Takaichi government a stronger grip on downside moves in Japanese government bonds and the yen, within what is known as “Takaichi trades.”

• Varathan added that she can adopt a more coherent fiscal policy and has a plan built on reasonable figures, which should reduce doubts around her. What she needed was the political capital to implement it without having to make multiple concessions to pro-stimulus factions.

• Yosuke Miyairi, FX and rates strategist at Nomura, said the dollar-yen pair could follow narrowing US-Japan rate differentials and fall toward 150 if investors see Takaichi as more fiscally responsible.

• Harvey Bradley, Co-Head of Global Rates at Insight Investment, said that as Prime Minister Sanae Takaichi shifts from a relatively conservative fiscal stance toward more precisely targeted stimulus, the balance of risks may tilt toward further tightening by the Bank of Japan.

• Bradley added that a neutral rate near 1.5% for the Bank of Japan appears to be a reasonable estimate.

Japanese Interest Rates

• Market pricing for a quarter-point rate hike by the Bank of Japan at its March meeting is currently steady below 10%.

• To reprice those expectations, investors are watching for further data on inflation, unemployment, and wages in Japan.

The glow around artificial intelligence has started to fade as liquidity shifts back toward shares of major oil companies, marking a notable change in investor risk appetite. Despite announcements by technology giants that they plan to spend hundreds of billions of dollars on AI this year, markets have responded with a wave of stock selling, as traders grow more skeptical about the near-term payoff of the AI story.

As investors search for safer havens, capital has rotated into the energy sector, particularly large oil and gas companies, which are viewed as less risky and more capable of generating immediate cash flows.

Concerns Weigh on Technology Stocks

Last week saw a sharp decline in major technology stocks, as investors reduced their holdings amid fears that artificial intelligence could displace the traditional software sector. However, Nvidia CEO Jensen Huang rejected these concerns, calling them illogical.

Huang said that the idea the software tools industry is in decline and will be replaced by AI — reflected in heavy pressure on software stocks — makes little sense, adding that time will prove otherwise.

Heavy Spending Raises Worries

The core concern is not only AI substitution, but also the enormous spending plans of technology companies, which exceed $660 billion this year alone. Amazon, for example, announced capital spending of $200 billion in 2026, about $50 billion above market expectations.

Meta has also revealed plans to spend $135 billion this year, nearly double its 2025 spending, with most of that directed toward AI projects.

Oil Keeps Delivering Profits

While technology firms are consuming liquidity on data centers, chips, and power infrastructure, major oil and gas companies continue to focus on their core business of oil and gas production — itself a critical input for expanding AI infrastructure.

Investor interest in energy stocks has also been supported by reduced warnings about peak oil demand, after the International Energy Agency acknowledged that oil will likely remain in use beyond 2030.

Strong Gains for Energy Shares

According to a Financial Times report citing Bloomberg data, US oil and gas stocks have risen about 17% since the start of the year. These gains have helped lift the market value of ExxonMobil, Chevron, and ConocoPhillips by roughly 25% over the past twelve months.

European oil companies have also recorded share price gains, though at a slower pace than their US counterparts.

The Paradox of Lower Oil Prices

The Financial Times noted that these gains came despite a decline in global oil prices, which is typically unusual. However, major oil companies remain profitable even at lower prices, while massive AI investments have yet to translate into clear financial returns.

Although last year’s oil price drop affected profits for both large and smaller producers, the sector has remained profitable, supported in part by IEA projections that oil demand could continue growing through at least 2050.

Debt and Dividends Favor Oil

Another factor boosting the appeal of oil companies is their relatively moderate debt levels compared with technology firms, which are increasingly turning to borrowing to finance large investment programs.

Oil companies also continue to reward shareholders through dividends and share buybacks, even if that sometimes requires additional borrowing, according to some analyst expectations.

Technology Cash Flows Under Pressure

By contrast, technology companies are expected to see a sharp decline in cash flows this year due to heavy AI spending. Morgan Stanley expects Amazon to post negative cash flow of about $17 billion, while Bank of America forecasts a deficit of up to $28 billion.

Alphabet has quadrupled its long-term debt over the past year, and analysts expect its free cash flow to fall by about 90% this year. A similar pattern is expected for Meta, according to Barclays estimates.

Investor Caution Is Rising

Although banks still recommend buying major technology stocks and do not express deep concern about the sector or hyperscalers, traders have become more cautious in allocating capital.

Promises of future returns are no longer enough for everyone, especially when another sector is offering returns today rather than tomorrow — a role currently filled by major oil companies.