Gold prices on track for the third weekly profit in a row
Gold prices fell in European trade on Friday for the first time in four sessions away from a five-week high on profit-taking.
Despite the losses, the precious metal is still heading towards the third weekly profit in a row after recent weak US data boosted the odds of a March Fed rate cut.
The Price
Gold prices fell 0.25% today to $2708 an ounce, with a session-high at $2717.
On Thursday, gold rose 0.7%, the third profit in a row, marking a five-week high at $2724 as US yields dropped.
Weekly Trades
Gold prices are up 0.75% so far this week, about to mark the third weekly profit in a row.
US Rates
Earlier US data showed core inflation slowed down in December, while retail sales also slowed down more than expected in December, as unemployment claims rose last week.
Some Fed officials stated that recent Wednesday data showed US inflation continues to taper off, even with increasing uncertainty in upcoming months.
Fed member Christopher Waller said three three or four interest rate cuts this year are still possible if US data continued to weaken.
According to the Fedwatch tool, the odds of a 0.25% Fed rate cut in January stood at just 3%.
The odds of a similar cut in March rose from 23% to 31%.
SPDR
Gold holdings at the SPDR Gold Trust fell 3.74 tons yesterday to a total of 868.78 tons, the lowest since December 19.
Sterling under pressure before UK retail sales data
Sterling fell in European trade on Friday against a basket of major rivals, expanding the losses for the second session against the dollar and approaching 14-month lows once more under pressure from the rising likelihood of a BOE rate cut in February.
Such odds are rising after recent data showed UK inflation slowed down in December, with investors now awaiting important retail sales data later today to gather more clues.
The Price
The GBP/USD fell 0.25% today to $1.2210, with a session-high at $1.2245.
The pound lost 0.1% yesterday, resuming losses and recovering from a 14-month nadir at $1.2099.
UK Rates
Recent data showed UK main inflation indices slowed down in December, in turn reducing the price pressure on the Bank of England policymakers.
Following the data, the odds of a UK 0.25% interest rate cut in February rose to 80%.
Investors expect 65 basis points overall of interest rate cuts this year by the BOE, up from 60 basis points in previous forecasts.
UK Retail Sales
Later today, UK retail sales data for December will be released, expected to show an increase of 0.4%, up from a 0.2% increase in November.
Yen about to mark weekly profit on BOJ prospects
The Japanese yen fell in Asian trade on Friday away from a four-week high against the greenback on profit-taking.
Despite the losses, it looks like the yen is heading for its first weekly profit in 2025 ahead of the Bank of Japan’s policy meeting next week.
Recent bullish remarks from BOJ officials boosted the odds of a 0.25% rate hike this month.
The Price
The USD/JPY pair rose 0.35% today to 155.66 yen per dollar, after hitting December 19 lows at 154.97.
The yen rose 0.85% on Thursday against the dollar as US 20-year treasury yields sustained heavy losses.
Weekly Trades
The yen is up 1.3% so far this week against the dollar, about to mark the second weekly profit in three weeks, and the first this year.
Bullish Remarks
Bank of Japan Governor Kazuo Ueda said the BOJ will raise interest rates and adjust the degree of policy easing if the economy keeps sending signals of improvement.
Ueda said the central bank will discuss the country’s economic developments at its meeting next week and will consider carefully before taking the interest rate decision.
The Bank of Japan Deputy Governor Ryozo Himino said the BOJ will discuss a potential rate hike next week amid gains in wages, and more clarity in regards to US policies.
Japanese Rates
Following the remarks, the odds of a BOJ interest rate hike in January rose to 80%, with investors now waiting for more data and remarks this week to gather more clues.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Fed rate cut in January stood at just 3%.
The odds of a similar cut in March rose from 23% to 30%.