Gold prices rose more than 1.5% in the European market on Monday, extending gains for a second consecutive session and trading back above the psychological $5,000 per ounce level, supported by the current decline in the US dollar against a basket of major global currencies.

Following less aggressive comments from several Federal Reserve officials, traders are watching closely this week for a series of key US economic releases that will provide strong evidence about the path of US interest rates over the course of this year.

Price Overview

Gold prices today rose by 1.65% to $5,047.18 per ounce, from an opening level of $4,964.30, with a session low recorded at $4,964.30.

At Friday’s settlement, gold gained 3.7%, marking its third advance in the past four sessions, driven by safe-haven buying amid geopolitical tensions between the United States and Iran.

Over the past week, gold posted a 1.45% gain, recording its fourth weekly rise in the last five weeks.

US Dollar

The US Dollar Index fell 0.4% on Monday, extending losses for a second straight session and reflecting continued weakness in the US currency against a basket of major and secondary currencies.

A weaker dollar makes dollar-denominated gold bullion more attractive to holders of other currencies, supporting demand.

The dollar is facing negative pressure from tighter scrutiny of capital spending by major technology companies, rising concerns about AI-driven disruption in the software sector, and liquidity and margin-related pressures linked to gold and silver markets.

US Interest Rates

San Francisco Federal Reserve President Mary Daly said on Friday that one or two additional rate cuts may be needed to address weakness in the labor market.

According to the CME FedWatch tool, the probability of leaving US interest rates unchanged at the March meeting stands at 85%, while the probability of a 25 basis point rate cut is priced at 15%.

To reprice these expectations, investors are closely monitoring upcoming US economic data as well as further comments from Federal Reserve officials.

Starting Tuesday, several key US data releases are due, including retail sales, the delayed jobs report on Wednesday, weekly jobless claims on Thursday, and core inflation data for January on Friday.

Gold Outlook

Kelvin Wong, Senior Market Analyst for Asia Pacific at OANDA, said the very short-term relationship during the session between the dollar and silver, as well as gold, is helping push precious metals higher.

Tim Waterer, Chief Market Analyst at KCM Trade, said bargain hunting is also driving gold back above the $5,000 level.

He added that any weakness in employment data could support gold’s recovery, noting that no Federal Reserve rate cut is expected before mid-year unless labor market data shows a sharp deterioration.

SPDR Fund

Holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, declined by 1.72 metric tons on Friday, marking the fourth consecutive daily decrease, bringing total holdings down to 1,076.23 metric tons, the lowest level since January 15.

The euro rose in European trading on Monday against a basket of global currencies, extending gains for a second straight session versus the US dollar and recording a one-week high, supported by continued downside pressure on the US currency ahead of a data-heavy week in the United States.

Following the European Central Bank’s first monetary policy meeting of the year, expectations for a rate cut in March have eased, despite the recent slowdown in inflationary pressures.

Price Overview

Euro exchange rate today: the euro rose against the dollar by more than 0.35% to $1.1854, the highest level in a week, up from the day’s opening at $1.1810, and recorded a session low at $1.1809.

The euro closed Friday up 0.3% against the dollar, its first gain in three sessions, as part of a recovery move from a two-week low at $1.1766.

Over the past week, the euro lost 0.3% against the dollar, marking its first weekly decline in three weeks, due to correction and profit-taking from five-year highs.

US dollar

The dollar index fell 0.35% on Monday, extending losses for a second consecutive session, reflecting continued weakness in the US currency against a basket of major and minor currencies.

The decline comes under negative pressure led by tighter scrutiny of capital spending by major technology companies, rising fears of AI-driven disruption in the software sector, and liquidity and margin-related pressures linked to gold and silver.

The dollar’s weakness comes at the start of a week that will bring several key US releases, including retail sales, inflation data, and the delayed jobs report due Wednesday.

European interest rates

The European Central Bank kept its main interest rates unchanged last week at 2.15%, the lowest level since October 2022, marking the fifth consecutive meeting without a change.

ECB President Christine Lagarde said the bank is “not pre-committing to a specific rate path,” stressing that the March decision will depend entirely on incoming data in the coming weeks.

Lagarde added that the ECB is closely monitoring the euro exchange rate, noting that the currency’s current strength helps restrain imported inflation and may support reaching targets without the need for further tightening.

Money markets repriced expectations after the meeting, with the probability of a 25-basis-point ECB rate cut in March falling from 50% to 30%.

Investors are waiting for further eurozone data on inflation, unemployment, and wages to reassess those expectations.

The Japanese yen rose in Asian trading on Monday against a basket of major and minor currencies, heading toward its first gain in seven days against the US dollar, as it attempts to recover from a three-week low recorded in early trading this week, supported by notable dip-buying activity.

The move is also supported by rising concerns over possible intervention by Japanese monetary authorities to support the local currency, outweighing the impact of the ruling party’s landslide election victory led by Prime Minister Sanae Takaichi.

The ruling Liberal Democratic Party, led by Takaichi, secured a sweeping victory in the House of Representatives election on Sunday, backed by pledges to ease living-cost pressures on Japanese households and accelerate economic stimulus efforts.

Price Overview

The Japanese yen exchange rate today: the dollar fell against the yen by 0.6% to 156.20, from Friday’s close at 157.18, and recorded an intraday high at 157.66, the highest level since January 23.

The yen ended Friday down 0.1% against the dollar, marking its sixth straight daily loss, driven by election-related speculation in Japan.

The yen lost 1.6% against the dollar last week, its first weekly loss in three weeks and the largest weekly decline since July 2025.

Landslide victory

Japanese Prime Minister Sanae Takaichi achieved a historic landslide victory in Sunday’s general election, strengthening her grip on power and granting her a strong mandate to push forward her political and economic agenda.

The Liberal Democratic Party secured 316 seats on its own out of 465 in the House of Representatives, the highest seat count for the party since its founding in 1955.

With this result, the party holds a two-thirds majority on its own, enabling it to pass laws and budgets even if rejected by the upper house, and opening the door to major constitutional amendments.

With its new partner, the Japan Innovation Party, winning 36 seats, the ruling coalition’s total rose to 352 seats.

The centrist reform opposition alliance suffered heavy losses, giving up more than two-thirds of its previous seats.

Early voting reached a record 26%, or about 27 million voters, despite severe cold and snowfall across large parts of the country on election day.

New warnings

Atsuki Mimura, Japan’s top currency diplomat, said authorities are closely monitoring foreign exchange market moves with a high sense of urgency. Exchange rates should move in a stable manner reflecting economic fundamentals, and appropriate action will be taken if needed to counter excessive or speculative moves.

Opinions and analysis

Sim Moh Siong, a currency strategist at OCBC in Singapore, said that although the yen’s initial weakness did not develop as expected, the outlook for the Japanese currency still points to difficulty achieving sustained strength.

He added that, at least in the near term, intervention risks remain a concern, which could limit gains in the dollar/yen pair.

Shoki Omori, chief rates and FX strategist at Mizuho Bank in Tokyo, said the Liberal Democratic Party’s landslide win removes political uncertainty and supports policy execution, but shifts market focus directly toward how fiscal policy will be designed and delivered.

He added that fiscal expansion risks had largely been priced in before the election, and the key question now is whether those risks will intensify or gradually fade.

Japanese interest rates

Money markets price the probability of a quarter-point rate hike by the Bank of Japan at the March meeting at below 10%.

Investors are watching for further data on inflation, unemployment, and wages in Japan to reassess those expectations.

The prospect of AI-driven disruption has hovered over the economy for years, but new software tools unveiled this week triggered a sharp selloff on Wall Street.

Software stocks were hit by heavy selling during the week after investors realized that the threat of AI displacing existing business models has become a present reality rather than a distant risk.

While the possibility of AI disruption has long been discussed, a new wave of tools launched this week by a San Francisco startup forced Wall Street into a sudden confrontation with that reality.

Software companies most exposed to the risks from these new tools were among the hardest hit, along with investment funds that lend to them. The selling pressure also weighed on the broader market, with the S&P 500 turning negative for the year on Thursday after falling in six of the last seven sessions, before rebounding 1.5% the following day.

In recent years, artificial intelligence acted as rocket fuel for equities, pushing prices to record highs. But since October, that enthusiasm has started to fade as markets increasingly digest the practical implications of this transformative technology.

Investors are no longer only worried that AI could render some companies obsolete — they are also questioning the scale of corporate spending on it. Those concerns intensified Thursday after Amazon revealed plans to spend $200 billion this year on AI and other major investments, about $50 billion above analyst expectations, sending its stock down more than 7% on Friday.

Alphabet, Google’s parent company, said this week it may spend up to $185 billion this year, while Meta said last week its capital expenditures — largely driven by AI — could reach $135 billion.

In the software sector, the immediate trigger for this week’s selloff was Anthropic’s announcement on Tuesday of additional free software tools that allow companies to automate functions such as customer support and legal services.

Because these tools are open-source, any company can download and use them at no cost, threatening to replace paid enterprise software currently sold by other vendors.

Another area exposed to AI risk is Software-as-a-Service, or SaaS — the subscription-based model that delivers software over the internet instead of through on-premise installation. New AI-powered free software models could replace not only SaaS business models but also a large portion of the workforce built around them.

Sam Altman, CEO of OpenAI, said in an interview with the tech streaming program TBPN on Thursday: we have seen several major selloffs in SaaS stocks over the past few years as these software models were introduced, and I expect more.

Analysts have dubbed the broad selling wave the “SaaSpocalypse.”

Shares of companies such as LegalZoom, LexisNexis, and Thomson Reuters — which provide legal services and research — fell by as much as 20% over the past week, with uneven rebounds in recent sessions.

Salesforce, a major SaaS and customer-relationship-management software provider, has dropped 25% over the past month.

Even creative software firms were not spared. Shares of Adobe and Figma — both design-tool developers — fell 9% and 17% respectively during the week, amid concerns that many core design functions could be automated in the future.

AI spending pressures are not limited to software. The boom in AI investment has driven massive demand for RAM and related hardware needed to run AI systems.

Qualcomm said on Wednesday it faces uncertainty about chip demand over the next two years, partly because sharply rising memory costs could weaken consumer demand for new devices. Qualcomm shares are down about 20% this year.

Software companies have also been a preferred target for private credit lenders because subscription models provide steady income streams that can support debt loads.

While private credit deals are not publicly disclosed, loans held by business development companies, or BDCs, serve as a proxy. According to Barclays analysts, roughly half of software-sector debt held by these firms — about $45 billion — matures after 2030, raising duration and disruption risks if AI displaces borrowers before repayment.

A VanEck ETF tracking major BDC holdings is down about 5% this year and more than 20% over the past twelve months.

Even after Ares Management and Blue Owl Capital — two of the largest private credit firms — reported results widely praised by Wall Street analysts this week, their shares remained under pressure from AI disruption fears. Ares is down more than 20% this year, while Blue Owl has fallen more than 16%.

On a Thursday analyst call, Blue Owl co-CEO Marc Lipschultz strongly rejected the idea that AI threatens the firm’s lending business, saying there are no red flags — in fact not even yellow flags — mostly green flags.

CFO Alan Kirshenbaum attributed current challenges to headwinds in private credit, AI, and software, as well as investor redemptions.

Analysts were largely reassured by the company’s results. Glenn Schorr of Evercore ISI wrote that if you removed the company’s name from the top of the report and read the details, you would think it was a very strong quarter.

Bitcoin — which is heavily influenced by retail investors and often trades in line with popular equity themes — fell to around $60,000, its lowest level since October 2024, before rebounding toward $70,000.

During a congressional hearing Wednesday, Treasury Secretary Scott Bessent said the government does not have the authority to force banks to buy Bitcoin to support prices.

As investors cut exposure to more speculative bets such as AI stocks and cryptocurrencies, they are rotating into more traditional sectors viewed as more resilient during volatility.

Since the start of the year, energy, consumer staples, and materials stocks have gained more than 10%, while the technology sector has lagged.

Angelo Kourkafas, strategist at Edward Jones Asset Management, said that after years of technology leading the market, the balance of power is shifting as investors rotate toward traditional parts of the economy.