Gold prices rose in the European market on Friday to resume gains that had paused yesterday, trading once again near record highs, on track to post a fourth consecutive weekly gain, supported by the current weakness in US dollar levels.

Mounting concerns over weakness in the US labor market have overshadowed inflation worries ahead of a widely expected interest rate cut by the Federal Reserve next week.

Price Overview

• Gold prices today: Gold rose by 0.65% to ($3,656.71), from the opening level at ($3,633.96), with a low at ($3,630.63).

• At Thursday’s settlement, gold lost 0.2% in its second decline in the last three sessions, following profit-taking from the all-time high of $3,674.80 an ounce.

Weekly Performance

Over the course of this week, which officially ends at today’s settlement, gold is up about 1.95% so far, on track for a fourth straight weekly gain.

These weekly gains are attributed to strong safe-haven demand amid rising concerns about soaring global debt levels and intensifying geopolitical tensions in the Middle East and Eastern Europe.

US Interest Rates

• US consumer prices rose by 0.4% in August, the largest monthly increase in seven months, while data on Wednesday showed an unexpected contraction in US producer prices for the same month.

• Weekly jobless claims increased last week, confirming a tangible decline in the labor market. This followed last Friday’s US employment report, which indicated that job growth nearly stalled in August alongside a rise in unemployment.

• According to CME Group’s FedWatch tool: the probability of a 25-basis-point rate cut at the September meeting is currently priced at 100%, with a 7.5% chance of a larger 50-basis-point cut.

• The probability of a 25-basis-point cut in October is also priced at 100%, with a 6% chance of a 50-basis-point move.

• The Federal Reserve meets next week to discuss appropriate monetary policy for US economic developments, with a widely expected 25-basis-point rate cut.

Gold Outlook

• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: the market is now pricing in a high probability of at least three Fed rate cuts before the end of 2025, far above the expectations from two months ago, which supports higher gold prices.

• Ryan McIntyre, managing partner at Sprott, said: the price is not far from $3,700, which could happen at any moment. In the short term, we see resistance around $3,900 based on our technical analysis, but in the long term, we believe this is still far below the level of institutional ownership at most investment firms.

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.01 metric tons on Thursday, bringing the total to 977.95 metric tons, the lowest since August 29.

The euro rose slightly in the European market on Friday against a basket of global currencies, maintaining its gains for the second consecutive day against the US dollar, on its way to achieving a new weekly gain, supported by the European Central Bank meeting, which turned out to be more hawkish than markets had expected.

In line with expectations, the ECB kept interest rates unchanged for the second consecutive meeting. Sources confirmed that European monetary policymakers believe there is no need for further rate cuts to achieve the medium-term inflation target.

Price Overview

• Today’s euro exchange rate: The euro rose against the dollar by less than 0.1% to 1.1741$, from the opening price of 1.1734$, and recorded the lowest level at 1.1721$.

• On Thursday, the euro ended trading up by 0.35% against the dollar, resuming gains that had paused for two days due to correction and profit-taking from the seven-week high at 1.1780$.

Weekly Trading

Over the course of this week’s trading, which officially ends at today’s settlement, the euro is so far up by about 0.25% against the US dollar, on the verge of securing a second consecutive weekly gain.

European Central Bank

In line with expectations, the European Central Bank on Thursday kept its main interest rates unchanged at 2.15%, the lowest level since October 2022, marking the second consecutive meeting without changes.

In its monetary policy statement, the ECB said that inflation is currently approaching the 2% medium-term target, and that the Governing Council’s assessment of inflation expectations has remained broadly unchanged.

The ECB also noted that any minor deviation from the inflation target, if temporary and short-lived, would not necessarily justify an immediate policy move.

Christine Lagarde

ECB President Christine Lagarde said on Thursday that the bank remains in a “good position” and noted that risks to the economy have become more balanced than before.

European Interest Rates

• Sources: Policymakers at the European Central Bank believe that no further rate cuts are needed to achieve 2% inflation, despite new economic forecasts pointing to lower rates over the next two years.

• Sources: Unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.

• Money market pricing for an ECB rate cut of 25 basis points in October fell from 30% to below 10%.

• Traders have trimmed bets on ECB monetary easing, pointing to the end of this year’s rate-cutting cycle.

• Money markets now estimate a 50% probability of a 25-basis-point ECB rate cut by June 2026, compared with nearly 60% before the ECB’s statement.

The Australian dollar rose in the Asian market on Friday against a basket of global currencies, extending gains for the third consecutive day against its US counterpart, recording its highest level in ten months, and heading toward its biggest weekly gain since last April.

This strong weekly gain is supported by the rise in global commodity and base metal prices, in addition to renewed inflationary pressures on policymakers at the Reserve Bank of Australia, which has led to reduced expectations of an Australian interest rate cut in September.

Price Overview

• Today’s exchange rate of the Australian dollar: The Australian dollar rose against its US counterpart by about 0.15% to 0.6669, the highest since November 2024, from the opening price of 0.6659, and recorded the lowest level at 0.6656.

• On Thursday, the Australian dollar recorded a rise of 0.75% against the US dollar, its second consecutive daily gain, following the release of moderate inflation data in the United States.

Weekly Trading

Throughout this week’s trading, which officially ends with today’s settlement, the Australian dollar is up so far by about 1.75% against the US dollar, on the verge of achieving a third consecutive weekly gain and the biggest weekly gain since last April.

Global Commodity Prices

Global commodity and metal prices have recently witnessed a strong wave of increases, driven by rising demand from major economies, primarily China and the United States, along with geopolitical tensions that have boosted investor appetite for basic commodities as a safe haven.

This rise has a positive impact on the Australian economy, which is one of the largest exporters of iron ore, coal, and gold, as it helps strengthen the trade surplus and increase revenues for companies operating in the mining sector.

It also provides strong support for the government budget through higher revenues from fees and taxes, giving the Australian economy greater resilience in facing global inflationary pressures and maintaining stable growth rates.

Australian Interest Rates

• Recent data released in Sydney showed inflation in the country rising to its highest level in a year, renewing inflationary pressures on policymakers at the Reserve Bank of Australia.

• Following the inflation data, the pricing of the likelihood of the Reserve Bank of Australia cutting interest rates by 25 basis points in September dropped from 30% to 22%.

• To reprice these expectations, investors are awaiting more data on inflation, unemployment, and wages in Australia before the upcoming September 30 meeting.

Most cryptocurrencies rose during trading on Thursday amid a rebound in risk appetite as bets increased on the Federal Reserve cutting interest rates this month, despite the release of disappointing economic data today.

Government data released today in the United States showed that the consumer price index rose by 0.4% in August, exceeding expectations of 0.3%, while the annual reading came in at 2.9%, in line with forecasts.

Excluding some volatile items such as energy and food, the core consumer price index rose by 0.3% on a monthly basis and by 3.1% on an annual basis, with both readings matching expectations.

This comes after producer price index data showed an unexpected monthly decline of 0.1% and a 2.6% increase year-on-year.

Meanwhile, other data revealed that the number of weekly jobless claims rose by 27,000 in the past week to 263,000, surpassing expectations of 235,000.

Despite this data, market expectations still point to the Federal Reserve cutting interest rates by 25 basis points at the meeting scheduled for September 17, according to the CME FedWatch tool, while bets on a larger 50 basis point cut edged slightly higher.

Ethereum

In trading, the price of Ethereum rose by 2.1% to $4,423.1 at 21:24 GMT on CoinMarketCap.

Ripple

The price of Ripple rose by 1.3% to $3.02 at 21:24 GMT on CoinMarketCap.