Gold prices skidded in European trade on Thursday to two-week lows away from the psychological barrier of $2900 amid ongoing profit-taking, while the dollar gained ground against major rivals. 

The odds of a Fed interest rate cut in March fell sharply, with investors now waiting for crucial US GDP growth and unemployment claims data to gather more clues.

Prices

Gold prices fell 1.35% to $2877 an ounce, the lowest since February 12, down from the opening of $2916.

On Wednesday, gold rose 0.1% after a 1.9% drop on Tuesday, marking the largest loss in two weeks on profit-taking away from a record high at $2956.

The Dollar

The dollar rose 0.25% on Tuesday against a basket of major rivals, making greenback-denominated gold futures costlier to holders of other currencies.

As Trump prepares to impose tariffs on Mexico and Canada, while threatening the EU and other countries with additional tariffs, inflationary concerns are mounting on the Federal Reserve, with interest rates likely remaining at current levels for an extended duration.

US Rates

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 2.5%.

Now traders await crucial US GDP growth and unemployment claims data today, in addition to remarks by several Fed officials on the future of the battle with inflation and monetary policies.

SPDR

Gold holdings at the SPDR Gold Trust fell 0.86 tons yesterday to a total of 906.96 tons, away from August 2023 highs at 907.82 tons.

The euro lost ground in European trade on Thursday, extending losses for the second session against the dollar away from two-month highs on profit-taking after Trump’s threats of imposing tariffs on the EU.

Also recent bullish remarks by some ECB officials hurt the odds of an ECB interest rate cut in March with traders now awaiting February inflation data for Spain and Germany. 

The Price

The EUR/USD pair fell 0.25% today to $1.0459, with a session-high at $1.0492.

The euro closed down 0.3% on Wednesday, the first loss in three days on profit-taking away from a two-month high at $1.0528.

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 New Zealand dollar fell in Asian trade on Thursday on track for the fifth loss in a row against the US dollar, hitting two-week lows on risk aversion and due to concerns about Trump’s tariffs. 

US President Donald Trump continues to threaten tariffs on major economies worldwide in a step aimed at reducing the US trade deficit, which paves the way for a global trade war.

The Price

The NZD/USD fell 0.4% today to $0.5675, the lowest since February 14, with a session-high at $0.5701.

The kiwi closed down 0.55% on Wednesday against the greenback amid mounting risk aversion while global stocks tumbled.

Trump’s Tariffs

President Trump revealed plans to potentially delay the implementation of 25% tariffs on Canadian and Mexican imports from March 4 to April 2.

However, White House officials asserted the tariffs are still firmly in place as Trump is ensuring that Mexico and Canada are bolstering their borders and stemming the tide of immigrants and fentanyl to the US.

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

Investors are concerned about the impact on the global economy from Trump’s aggressive tariffs and their repercussions with retaliatory tariffs taken by other sides. 

The New Zealand economy heavily relies on exporting commodities such as meat and dairy, making the economy indirectly exposed to Trump’s tariff waves on countries such as China and the EU.

New Zealand Rates

The odds of a New Zealand 0.25% interest rate cut at the April 9 meeting stood at just 93%, while rate futures indicating that rates will likely hit 3% by the end of the year.

Now investors await important data on New Zealand’s inflation, wages, unemployment in upcoming weeks to gather more clues.

Wheat prices fell on Wednesday on the Chicago Exchange amid mounting concerns about the impact of the trade war, and potential market oversupply.

It comes amid signals that Russia and Ukraine are approaching a peace deal that would end the three-year war, which would boost grain supplies as both countries are major wheat exporters. 

Trump surprised the markets with plans to enforce the tariffs on Canadian and Mexican imports next month, shrugging off recent negotiations.

Trump also ordered the trade ministry to investigate US copper imports and whether there was a need to impose tariffs on the industrial metal to protect national security. 

The Norwegian government warned that Trump’s plans to impose 25% tariffs on European imports would lead to a dangerous trade war.

Corn

Corn May futures fell 0.1% to $4.93 a bushel.

Soybeans 

Soybean May futures fell 0.7% to $10.41 a bushel.

Wheat

Wheat May futures dropped 1.5% to $5.79 a bushel.