Gold prices rose in European trading on Wednesday to resume gains that had temporarily paused yesterday, beginning to recover from a two-week low amid active buying from corrective levels and supported by a halt in the rise of the US dollar in the foreign exchange market.

With the likelihood of a US interest rate cut in March fading, traders are awaiting several important US data releases later today, which the Federal Reserve relies heavily on in determining the course of monetary policy this year.

Price Overview

Gold prices today: gold prices rose by 2.0% to $5,190.79, up from the opening level of $5,088.52, after touching a session low of $5,085.13.

At Tuesday’s settlement, gold prices fell by 4.4%, marking the first loss in the past five days and the largest daily decline since February 2, hitting a two-week low of $4,996.10 per ounce.

That largest daily loss in a month was driven by accelerated profit-taking from the five-week high of $5,419.37 per ounce, in addition to pressure from the rise of the US dollar.

US dollar

The US dollar index fell about 0.2% on Wednesday, retreating from a four-month high of 99.68 points and heading toward its first loss in the last three sessions, reflecting a decline in the US currency against a basket of global currencies.

As is well known, a weaker US dollar makes gold bullion priced in dollars more attractive to buyers holding other currencies.

Aside from profit-taking, the dollar is retreating ahead of very important US data releases, which will provide further evidence regarding the likelihood of the Federal Reserve cutting US interest rates during the first half of this year.

US interest rates

Federal Reserve Governor Christopher Waller said last week that he is open to keeping interest rates unchanged at the March meeting if February labor market data indicates that the labor market has “stabilized” after its weak performance in 2025.

According to the CME Group’s FedWatch Tool, markets are pricing a 96% probability that US interest rates will remain unchanged at the March meeting, while the probability of a 25 basis point rate cut stands at 4%.

In order to reprice those expectations, traders are awaiting later today the release of US private sector employment data for February, along with other data on the performance of the services sector during the same month.

Gold outlook

Bob Haberkorn, senior market strategist at RJO Futures, said gold prices appear to be facing negative pressure driven by liquidity concerns. “We have a strong dollar and high bond yields.”

Haberkorn added that these pressures are likely to be short-term, and safe-haven flows driven by geopolitical risks are expected to support higher gold and silver prices.

SPDR fund

Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined on Tuesday by about 2.29 metric tons, bringing the total down to 1,099.04 metric tons, down from 1,101.33 metric tons, which had been the highest level since April 21, 2022.

The euro fell in European trading on Wednesday against a basket of global currencies, extending losses for a third consecutive session against the US dollar and trading near a four-month low, as surging global energy prices driven by the Iran war weigh on the outlook for Europe’s economy.

The crisis is expected to push prices higher and accelerate inflation across the eurozone, placing growing inflationary pressure on policymakers at the European Central Bank.

At the same time, the European economy may require additional monetary support to limit the slowdown in economic activity, creating a complex policy dilemma between containing inflation and supporting growth.

Price Overview

Euro exchange rate today: the euro declined 0.35% against the dollar to $1.1575, down from the opening level of $1.1613, after touching a session high of $1.1620.

The euro ended Tuesday’s trading down 0.65% against the dollar, marking a second consecutive daily loss and hitting a four-month low of $1.1530, as the surge in global energy prices overshadowed data showing eurozone inflation came in above expectations in February.

Global energy prices

Global oil and gas prices surged due to the fallout from the US-Israeli war on Iran, which disrupted energy exports from the Middle East. Tehran’s attacks on ships and energy infrastructure led to the closure of shipping routes in the Gulf and halted production from Qatar to Iraq.

Brent crude rose more than 16% this week and reached a 20-month high of $85.07 per barrel, while European gas prices jumped 70% since the end of last week.

Views and analysis

Analysts at Wells Fargo said in a note that the euro faces a difficult situation. Europe’s natural gas storage refill season is about to begin, and the European Union is entering the season with record-low gas levels in storage, meaning it will need to purchase large amounts of energy at a time when prices could rise significantly.

George Saravelos, head of global FX research at Deutsche Bank, said the impact of the Iran war on EUR/USD revolves around one key factor: energy.

Saravelos added that a negative supply shock is currently forming, effectively acting as a direct tax on Europeans that must be paid to foreign producers in US dollars.

Analysts at ING wrote in a research note that the European Central Bank’s position has suddenly come into question, and they doubt the issue can be resolved in the very near term.

They added that the possibility of the ECB raising interest rates poses a serious risk to interest rate carry trades and could lead to a significant widening in eurozone government bond spreads.

The Japanese yen rose in Asian trading on Wednesday against a basket of major and secondary currencies, beginning a recovery from a six-week low against the US dollar amid notable buying activity from lower levels. The rebound comes under the watchful eye of Japanese authorities seeking to support the local currency.

Weak labor market data in Japan has reduced expectations for Japanese interest rate hikes in the near term, as investors await further evidence regarding the Bank of Japan’s monetary policy path this year.

Price Overview

Japanese yen exchange rate today: the dollar fell against the yen by 0.3% to ¥157.18, down from the opening level of ¥157.68, after touching a session high of ¥157.86.

The yen ended Tuesday’s trading down by 0.2% against the dollar, marking a second consecutive daily loss and hitting a six-week low of ¥157.97 due to the impact of the Iran war.

US Dollar

The dollar index fell by about 0.1% on Wednesday, retreating from a four-month high of 99.68 and heading toward its first loss in the past three sessions, reflecting weaker performance of the US currency against a basket of global currencies.

In addition to profit-taking activity, the dollar is easing ahead of the release of key US data on private sector employment for February and the performance of the services sector during the same month.

These figures are expected to provide additional evidence regarding the likelihood of the Federal Reserve cutting US interest rates during the first half of this year.

Japanese authorities

Japanese Finance Minister Satsuki Katayama said on Tuesday that financial officials are monitoring markets closely with a “strong sense of urgency.” When asked about the possibility of currency market intervention, she said Japan reached a mutual understanding with the United States last year.

Japanese interest rates

Data released on Tuesday in Tokyo showed Japan’s unemployment rate rose to 2.7% in January, above market expectations of 2.6%, after recording 2.6% in December.

Following this data, market pricing for a 25-basis-point interest rate hike by the Bank of Japan in March fell from 15% to 5%.

Pricing for a 25-basis-point rate increase in April also dropped from 40% to 25%.

In the latest Reuters poll, the Bank of Japan is expected to raise interest rates to 1% by September.

Analysts at Morgan Stanley and MUFG wrote in a joint research note that they had already viewed the probability of a rate hike in March or April as low, but with rising uncertainty stemming from developments in the Middle East, the Bank of Japan is likely to adopt a more cautious stance, further reducing the chances of a near-term rate hike.

Investors are now awaiting additional data on inflation, unemployment, and wages in Japan to reassess these expectations.

Palladium (XPD) fell sharply on Tuesday, coming under heavy pressure alongside other industrial metals amid geopolitical concerns tied to the ongoing conflict in the Middle East between the United States and China.

Key factors behind the decline:

Supply disruptions and geopolitical risks

Rising tensions in the Middle East and disruptions to some mining operations fueled concerns over supply. Paradoxically, however, these fears did not translate into strong buying interest. Instead, they added to market volatility while sellers maintained control.

Weaker US support for electric vehicles

Diminishing political momentum behind electric vehicle incentives in the United States weighed on sentiment. Palladium is heavily used in automotive catalytic converters, so any slowdown in supportive policy measures puts pressure on industrial demand expectations.

Clear technical pressure

The drop below the 20-day and 50-day moving averages sent a negative signal to short-term traders. The ADX indicator also reflects weak trend strength but with a bearish bias, suggesting that downward momentum is not yet strong enough for a decisive reversal, though sellers remain dominant.

Analyst views: divided outlook

Anton Kharitonov of Traders Union sees the break below short- and medium-term averages as a warning sign, identifying $1,715 as a key support level. A move below that could open the door to further losses, emphasizing that any current rebound appears fragile as long as sellers control the market.

Viktoras Karabytjank of Traders Union takes a more constructive stance, noting that weekly indicators such as RSI and MACD remain supportive over the longer term. He views the range between $1,700 and $1,750 as a consolidation phase within a broader long-term uptrend.

Market analyst Parshwa Turakhia focuses on the short term, arguing that indicators such as Stoch RSI and CCI point to near-term oversold conditions that could allow quick rebounds toward $1,750, though high volatility is likely to persist.

In US trading, March palladium futures were down 7.5% at $1,630.5 per ounce as of 19:18 GMT.