Gold prices rose in European trading on Monday, extending gains for a second consecutive day and entering a new phase of record-setting highs, particularly after breaking above the $4,400-per-ounce level for the first time in history. The move was driven by strong investment demand for the precious metal and supported by a decline in the US dollar in the foreign exchange market.

These developments come amid growing bets that the Federal Reserve will cut US interest rates twice next year, especially after recent consumer price data showed easing inflationary pressures on US policymakers.

Price overview

Gold prices today: gold rose by about 1.9% to $4,420.06 per ounce, marking a new all-time high, from an opening level of $4,338.71, after touching an intraday low of $4,338.05.

At Friday’s settlement, gold prices rose 0.15%, marking the second gain in the past three days, amid relatively active safe-haven buying.

The precious metal gained 0.9% last week, recording a second consecutive weekly increase, supported by interest rate cuts in the US and the UK.

US dollar

The dollar index fell 0.15% on Monday, retreating from a one-week high and heading toward its first loss in four sessions, reflecting a pause in the dollar’s advance against a basket of major and minor currencies.

Beyond corrective moves and profit-taking, the dollar weakened following cautious comments from some Federal Reserve officials, which highlighted growing concern over softness in US labor market indicators.

US interest rates

According to the CME FedWatch tool, pricing for keeping US interest rates unchanged at the January 2026 meeting currently stands at 78%, while the probability of a 25-basis-point rate cut is priced at 22%.

Investors are currently pricing in two US interest rate cuts over the course of next year, while Federal Reserve projections point to only one 25-basis-point cut.

To reprice these expectations, investors are closely monitoring upcoming US economic data, along with comments from Federal Reserve officials.

Gold outlook

Matt Simpson, senior analyst at StoneX, said that December typically delivers positive returns for gold and silver, meaning seasonal conditions are supportive.

Simpson added that with gold already up about 4% this month and year-end approaching, investors may wish to exercise caution due to thinner trading volumes and a higher likelihood of profit-taking.

According to Reuters technical analyst Wang Tao, spot gold may rise to $4,427 per ounce after breaking through a key resistance level at $4,375.

SPDR fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Friday for the second consecutive day, leaving total holdings steady at 1,052.54 metric tons.

The euro rose in European trading on Monday against a basket of global currencies, starting the week on a positive note versus the US dollar, as the dollar’s rally paused after a strong run of gains.

The single currency’s rebound was also supported by a decline in expectations that the European Central Bank will cut interest rates in February 2026, particularly amid recent improvements in economic activity across the euro area, alongside expectations that this improvement will continue as downside risks ease.

Price overview

Euro exchange rate today: the euro rose about 0.15% against the dollar to $1.1722, from an opening level of $1.1708, after touching an intraday low of $1.1706.

The euro ended Friday’s session down 0.15% against the dollar, marking a fourth consecutive daily loss, as corrective moves and profit-taking continued from a three-month high at $1.1804.

The euro lost 0.3% against the dollar last week, recording its first weekly loss in a month, amid slower investment demand for the single currency.

US dollar

The dollar index fell by more than 0.1% on Monday, retreating from a one-week high and heading toward its first loss in four sessions, reflecting a pause in the dollar’s advance against a basket of major and minor currencies.

Beyond corrective moves and profit-taking, the dollar weakened following cautious comments from some Federal Reserve officials, which highlighted growing concern over softness in US labor market indicators.

European interest rates

In line with expectations, the European Central Bank kept its key interest rates unchanged last week at 2.15%, the lowest level since October 2022, marking the fourth consecutive meeting with no change.

The ECB reaffirmed its data-dependent, meeting-by-meeting approach, without committing to a specific interest rate path, noting that current rates are appropriate given stable inflation and economic growth.

ECB President Christine Lagarde said the bank remains in a “good position” and stressed that there is consensus within the Governing Council to keep all options open, including the possibility of raising rates if necessary.

Money market pricing for a 25-basis-point rate cut by the ECB in February 2026 currently remains below 10%.

To reprice those expectations, investors are awaiting further euro area economic data on inflation, unemployment, and wage growth.

The Japanese yen rose in Asian trading on Monday against a basket of major and minor currencies, recouping part of the sharp losses it suffered on Friday against the US dollar, and beginning to recover from a four-week low, supported by relatively active buying from lower levels and by warnings from Japanese government officials about the possibility of intervention in the foreign exchange market.

On Friday, the Bank of Japan raised its benchmark interest rate by a quarter of a percentage point to 0.75%, the highest level in three decades, in a move that was widely expected by markets.

The accompanying monetary policy statement reinforced expectations that normalization and further rate hikes will continue if economic forecasts materialize. However, comments from Governor Kazuo Ueda were less hawkish than anticipated, leading to a decline in expectations for Japanese rate hikes during the first half of next year.

Price overview

The Japanese yen exchange rate today saw the dollar fall 0.3% against the yen to ¥157.23, from an opening level of ¥157.68, after recording an intraday high of ¥157.71.

The yen ended Friday’s session down 1.45% against the dollar, marking its second loss in the past three days and its largest daily decline since October 6, driven by comments from Kazuo Ueda.

The yen also posted a weekly loss of 1.2% against the dollar last week, its second consecutive weekly decline, amid weakening expectations for Japanese interest rate hikes in the first half of next year.

Japanese authorities

Early Monday morning in Tokyo, Japan’s top currency diplomat Atsuki Mimura and government spokesman Minoru Kihara expressed concern over “sharp and volatile” moves in the foreign exchange market.

They confirmed that Japanese authorities are closely monitoring currency developments, warning that officials are prepared to take appropriate action when necessary, in a clear signal of potential intervention to curb excessive volatility.

Japanese interest rates

The Bank of Japan’s policy board unanimously decided last week to raise interest rates by 25 basis points to 0.75%, the highest level since September 1995, marking the second rate hike in 2025 following an earlier move in January.

The Bank of Japan said that, given that real interest rates remain at extremely low levels, it will continue to raise rates if its economic and price forecasts are met.

Governor Kazuo Ueda indicated that the bank will examine the so-called neutral interest rate, in light of how the economy and prices respond to changes in interest rates, signaling a flexible, data-dependent approach aligned with actual economic conditions.

Following the bank’s meeting and Ueda’s remarks, market pricing for a quarter-point rate hike at the Bank of Japan’s January meeting remained below 20%.

To reprice those expectations, investors are awaiting further data on inflation, unemployment, and wage levels in Japan.

Views and analysis

Tony Sycamore, market analyst at IG in Sydney, said that while the Bank of Japan’s statement noted that real yields remain “significantly low,” which could signal further monetary tightening in the future, Governor Ueda’s press conference offered little new, merely reiterating the data-dependent approach.

Sycamore added that the lack of clearer guidance on the future pace of Japanese interest rate hikes disappointed markets, triggering selling pressure on the yen.

Gold prices rose during Friday’s trading despite a stronger dollar against most major currencies, amid ongoing uncertainty surrounding Federal Reserve policy.

New York Federal Reserve President John Williams said that “technical factors” may have negatively affected the accuracy of November inflation data, pushing the headline index below its underlying level.

“As a result, I think the data were distorted in some categories, which pushed the consumer price index lower, perhaps by about a tenth of a percentage point or so,” he said.

He stressed that it is difficult to be certain, but noted that December inflation data are expected to be more accurate.

Goldman Sachs said in a note on Thursday that gold prices are expected to rise by 14% to around $4,900 per ounce by December 2026.

Meanwhile, the dollar index rose 0.2% to 98.6 points as of 20:35 GMT, after hitting a high of 98.7 points and a low of 98.4 points.

In market trading, spot gold climbed 0.2% to $4,374.8 per ounce as of 20:36 GMT, with the precious metal posting weekly gains of 1.3%.

Silver futures for March delivery surged 3.20% to $67.335 per ounce, after reaching a record high of $67.68 during the session.