Gold prices skidded in European trade on Friday, hitting a three-week trough and about to mark its first weekly loss this year as the US dollar advances against major rivals. 

It comes before US personal consumption data for January, upon which the Federal Reserve relies to estimate inflation levels in the country. 

Prices

Gold prices fell 0.9% to $2851 an ounce, the lowest since February 6, with a session-high at $2885.

On Thursday, gold lost 1.35%, the second loss in three days on profit-taking away from a record high at $2956.

Weekly Trades

Gold is down 2.9% this week on track for the first weekly loss in 2025.

Gold marked its eighth weekly profit in a row last week, the longest such streak of gains since June 2020.

US Dollar

The dollar index rose 0.2% on Friday, expanding gains for the third straight session, and hitting a two-week high at 107.45 against a basket of major rivals.

A stronger dollar makes greenback-denominated gold futures costlier to holders of other currencies.

It comes as US President Donald Trump announced plans to enforce 25% tariffs on Canada and Mexico next week and not April as he previously suggested. He also plans additional 10% tariffs on Chinese imports, and pledged to impose 25% tariffs on EU cars and products.

US Rates

Cleveland Fed President Beth Hammock said she expects Fed’s monetary policies to remain steady for the time being.

Philadelphia Fed President Patrick Harker also supports maintaining borrowing costs steady at current levels.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at 4.5%.

Now investors await important US personal consumption data later today to gauge the state of inflation in the world’s largest economy.

SPDR

Gold holdings at the SPDR Gold Trust fell 0.86 tons yesterday to a total of 906.1 tons, away from August 2023 highs at 907.82 tons.

The euro fell in European trade on Friday on track for the third loss in a row against the dollar, plumbing two-week lows on risk aversion as US President Trump vows tariffs on Canada, Mexico, and China next week.

Following recent bullish remarks by some Fed officials, the odds of a Fed rate cut in March fell, with traders now waiting for German inflation data later today to gather more clues.

The Price

The EUR/USD pair fell 0.2% today to $1.083, the lowest since February 13, with a session-high at $1.0404.

Euro closed down 0.8% on Thursday against the dollar, the heftiest loss since January 2 on Trump’s tariffs threats against the EU.

Trump’s Tariffs

Trump spoke about a 25% additional tax on European imports, including cars, in order to reduce the giant trade deficit with the EU.

He accused the EU of taking advantage of the US with the $300 billion trade deficit, asserting the tariffs will be imposed soon.

He said the EU doesn’t take US cars or agricultural products, but the US takes everything from them, including millions of cars and huge amounts of food and agricultural products.

EU leaders asserted in a Brussels summit their readiness to retaliate if the US imposed tariffs, however, they asserted the importance of negotiations and avoiding escalation.

European Rates

European Central Bank President Christine Lagarde said recent positive developments in the eurozone indicate a rate cut isn’t an urgent matter.

ECB member Isabel Schnabel asserted the importance of not rushing into taking more monetary easing steps, as interest rates are approaching neutral levels already.

Following such remarks, the odds of an ECB 0.25% rate cut in March fell from 65% to 55%.

The yen rallied in Asian trade on Friday against a basket of major rivals, resuming gains against the US dollar and about to hit a four-month high, with the Japanese currency on track for the largest monthly profit since July on strong investment demand. 

As inflationary pressures mounted in Japan and bullish remarks from BOJ officials increased, the odds of a Bank of Japan interest rate hike in March rose as well.

The Japanese currency is also boosted by a steep drop in US 10-year treasury yields amid concerns in the markets after Donald Trump’s assertions on imposing tariffs on Mexico, Canada, and China.

The Price

The USD/JPY pair fell 0.5% today to 149.09 yen per dollar, with a session-high at 150.14.

The yen lost 0.5% on Thursday against the dollar on profit-taking away from a four-month high at 148.56.

Monthly Trades

The yen is up 3.9% so far in February against the dollar, heading for the second monthly profit in a row, and the largest since July 2024.

Japanese Rates

Recent inflation, services, and wages data from Japan showed increasing inflationary pressures on Bank of Japan policymakers.

Bank of Japan member Hajimi Takata asserted the importance of gradual interest rate hikes to contain the risks of inflation, which is approaching the 2% target.

BOJ Deputy Governor Shinichi Uchida said on Friday the bank will continue to reduce its purchases of government bonds despite the recent rise in yields, asserting its massive holdings of bonds still act as a massive stimulus to the economy.

Uchida reiterated the BOJ’s readiness to hike interest rates if economic developments and prices went as expected.

The odds of a BOJ interest rate hike in March now stand at 85%.

US Yields

US 10-year treasury yields fell 0.9% on Friday to an 11-week nadir at 4.222%, hurting the dollar’s standing.

It comes as US President Donald Trump announced plans to enforce 25% tariffs on Canada and Mexico next week and not April as he previously suggested. He also plans additional 10% tariffs on Chinese imports, and pledged to impose 25% tariffs on EU cars and products.

Now traders await important US personal consumption data for January, which could provide clues on the odds of a Fed rate cut in the first half of the year. 

US stock indices fell on Thursday despite earlier positive data, as Wall Street remains under pressure from the flaring trade war. 

Earlier data showed US GDP growth rose 2.3% on a quarterly basis in the fourth quarter, compared to a 3.1% rise in the third quarter.

US unemployment claims rose by 22 thousand to a three-month high at 242 thousand last week, beating estimates of 222.5 thousand.

US President Donald Trump announced that the 25% tariffs on Mexican and Canadian commodities will be enforced in early March.

At the close, Dow Jones fell 0.5%, or 193 points to 43,239 points, with a session-low at 43,224 points.

S&P 500 tumbled 1.6%, or 94 points to 5861 points to 5858 points.

NASDAQ slumped 2.8% to 18,544 points, with a session-low at 18,535 points.