Gold prices fell in European trading on Monday for the first time in four sessions, pulling back from a two-week high reached earlier during Asian trading as profit-taking and corrective selling emerged. The precious metal also came under pressure from a stronger US dollar against a basket of major global currencies.

With expectations for additional US interest rate hikes easing recently, investors are now awaiting fresh signals this week from the minutes of the Federal Reserve’s first policy meeting under Chairman Kevin Warsh, which could provide further clues about the direction of US monetary policy.

The Price

• Gold prices fell 0.75% to $4,144.94 per ounce, down from an opening level of $4,175.01, after reaching an intraday high of $4,203.06, the highest level since June 22.

• At Friday’s settlement, gold gained 1.3%, marking its third consecutive daily advance, supported by weaker US Treasury yields and a softer dollar.

• Gold rose 2.1% last week, posting its first weekly gain in five weeks and its strongest weekly performance since May, driven by reduced expectations for further US rate hikes this year.

US dollar

The US Dollar Index rose more than 0.2% on Monday, extending gains for a second straight session as the greenback continued to recover from a two-week low, reflecting broader strength against a basket of major and secondary currencies.

As a stronger dollar makes dollar-denominated gold more expensive for holders of other currencies, it tends to reduce demand for the precious metal.

Several analysts maintained a constructive outlook for the US dollar, suggesting it could appreciate by a modest 2%–3% during the second half of 2026.

US interest rates

• According to the CME FedWatch Tool, markets currently price a 76% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, while the probability of a 25-basis-point rate hike stands at 24%.

• For December, markets assign a 24% probability to unchanged rates and a 76% probability to a 25-basis-point increase.

• Investors are awaiting today’s ISM services sector report for June, which could offer additional insight into the strength of the US economy.

• On Wednesday, the Federal Reserve will release the minutes of its first monetary policy meeting under Chairman Kevin Warsh, which are expected to provide clearer guidance on the outlook for US interest rates this year.

Gold outlook

• Tim Waterer, Chief Market Analyst at KCM Trade, said gold has regained some stability as markets scale back expectations for further rate hikes. While easing yield pressures provides support, the strength of the US dollar continues to cap gains in the precious metal.

• JPMorgan said demand from key gold-buying sectors is unlikely to be as strong as previously expected, which could limit the metal’s upside this year.

• The bank forecasts gold prices to average around $4,300 per ounce in the third quarter before rising toward $4,500 per ounce in the fourth quarter.

SPDR Gold Trust

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Friday at 1,001.37 metric tons, the lowest level since September 24, 2025.

The euro weakened in European trading on Monday against a basket of global currencies, retreating from a two-week high versus the US dollar as investors engaged in profit-taking and corrective selling, while renewed demand for the greenback as a preferred currency investment also weighed on the single currency.

Softer-than-expected inflation data and less hawkish comments from the President of the European Central Bank have reduced expectations for a European interest rate hike in July, with investors now awaiting additional economic data from across the Eurozone.

The Price

• EUR/USD fell 0.1% to $1.1428, down from an opening level of $1.1438, after reaching an intraday high of $1.1441.

• The euro ended Friday little changed against the dollar after rising 0.5% in the previous session and touching a two-week high of $1.1473.

• The single currency gained around 0.5% against the dollar last week, marking its first weekly advance in three weeks, supported by easing expectations for additional US rate hikes this year.

US dollar

The US Dollar Index rose more than 0.1% on Monday, extending gains for a second consecutive session as the currency continued to recover from a two-week low, reflecting broader strength against a basket of major global currencies.

Several analysts maintained a positive outlook for the US dollar, suggesting it could appreciate by a modest 2%–3% during the second half of 2026.

Investors are focusing this week on the minutes of the Federal Reserve’s June meeting to gain further insight into policymakers’ interest rate expectations for the remainder of the year.

Later today, the Institute for Supply Management (ISM) will release its June report on US services sector activity, which is expected to provide important clues about the pace of business growth in the second quarter.

European interest rates

• ECB President Christine Lagarde said last week in Sintra, Portugal, that risks to inflation and economic growth in the Eurozone have become more balanced compared with a few weeks ago, helped by the recent decline in oil prices.

• Official Eurozone inflation data showed a sharper-than-expected slowdown in consumer prices during June, largely due to lower fuel costs following the end of the Iran conflict.

• Following those comments and inflation figures, money markets reduced the probability of a 25-basis-point ECB rate hike in July from 30% to just 5%.

• Investors are now awaiting further Eurozone data on inflation, unemployment, and wages to reassess the outlook for European monetary policy.

The Japanese yen weakened in Asian trading on Monday against a basket of major and minor currencies, extending its losses for a second consecutive session against the US dollar and moving further away from a two-week high as profit-taking and corrective selling continued.

The yen is once again drifting toward its weakest levels in 40 years, keeping investors focused on the potential next move by Japanese authorities, especially after the central bank's intervention in the foreign exchange market triggered only a brief rebound in the currency last Thursday.

The Price

• USD/JPY rose more than 0.35% on Monday to ¥161.86, up from an opening level of ¥161.26, with an intraday low of ¥161.24.

• The yen ended Friday down 0.15% against the dollar after reaching a two-week high of ¥160.48 earlier in the session.

• The Japanese currency gained 0.25% against the dollar last week, marking its first weekly advance since May, supported by speculation about a Bank of Japan intervention and weaker-than-expected US employment data.

Japanese authorities

The latest decline in the yen has brought the currency back into the spotlight as it trades near its weakest levels in four decades, reinforcing speculation that Japanese authorities could step into the foreign exchange market once again.

The yen fell to its lowest level since 1986 at ¥162.84 last Wednesday, prompting intervention by the Bank of Japan on Thursday. The move helped the currency rally 0.9%, its largest daily gain since May.

Views and analysis

• Analysts at OCBC believe intervention risks are more likely to trigger periods of volatility and temporary corrections rather than a lasting reversal in the USD/JPY trend.

• They added that without a meaningful shift in economic fundamentals, verbal warnings or even direct intervention alone are unlikely to change the broader direction of the currency pair.

• Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, said the market is fully aware of the risk of Japanese intervention.

• Chandler added that options market activity continues to show some large investors buying short-term dollar put options as a hedge against their long-dollar positions in case Japanese authorities intervene in the currency market.

US dollar

The US Dollar Index rose more than 0.1% on Monday, extending gains for a second straight session as the currency continued to recover from a two-week low, reflecting broader strength against a basket of global currencies.

Several analysts maintained a constructive outlook for the dollar and suggested it could appreciate by a modest 2%–3% during the second half of 2026.

Investors are focusing this week on the minutes of the Federal Reserve's June meeting for further insight into policymakers' interest rate expectations for the remainder of the year.

Japanese interest rates

• Market pricing for a 25-basis-point rate hike by the Bank of Japan at its July meeting remains below 25%.

• Investors are awaiting additional data on inflation, unemployment, and wage growth in Japan to reassess the likelihood of future rate increases.

Gold prices rose more than 1% on Friday and were on track to post their first weekly gain in five weeks after weaker-than-expected US jobs data prompted investors to scale back expectations for further Federal Reserve interest rate hikes.

Gold performance

Spot gold climbed 1.4% to $4,179.94 per ounce by 02:35 GMT, reaching its highest level since June 23, while US gold futures for August delivery advanced 1.6% to $4,193.20 per ounce.

The precious metal is on course for a weekly gain of around 2.3%, its first since the week ending May 25, supported by softer expectations for tighter US monetary policy following weaker-than-expected employment data.

A weaker US dollar also helped support gold prices, making the dollar-denominated metal more attractive to holders of other currencies.

Federal Reserve and interest rate outlook

Kelvin Wong, Senior Market Analyst at OANDA, said markets have begun repricing expectations for US interest rate hikes for the remainder of this year and the first quarter of next year after clearer signs of a slowdown in the US labor market emerged.

Data from the US Department of Labor showed the economy added just 57,000 jobs in June, well below expectations of 110,000.

Following the report, the probability of a September rate hike fell to around 54%, down from 66% before the data release, according to the CME FedWatch Tool.

Higher interest rates typically weigh on gold because it is a non-yielding asset, while fixed-income investments such as bonds become more attractive.

Despite the recent rebound, Wong warned that markets have not completely ruled out further rate hikes. He noted that if those expectations persist through year-end, gold could face renewed downside pressure and potentially fall toward $3,500 per ounce.

Central banks return as buyers

Separately, the World Gold Council reported that central banks resumed increasing their gold reserves in May, with net purchases totaling 41 metric tons, according to the latest available data.

Other precious metals

Silver rose 2.3% to $62.43 per ounce, while platinum gained 2.7% to $1,660.05 per ounce.

Palladium also advanced 1.3% to $1,284.40 per ounce, with all three metals heading for weekly gains and trading at their highest levels in more than a week.