Gold prices rose in the European market on Thursday, extending gains for a ninth consecutive session and continuing to smash record levels, after breaking above the $5,500 per ounce mark for the first time in history. Prices are now approaching the $5,600 level, supported by strong demand for the metal as a safe haven and by persistent weakness in the US dollar, despite comments from US Treasury Secretary Scott Bessent aimed at supporting global exchange rate stability.

In line with market expectations, the Federal Reserve kept interest rates unchanged, adopting a cautious tone in its statement. The central bank avoided providing clear signals about resuming an interest rate cutting cycle in the near term, stressing the need for more data to assess the path of inflation and economic activity before taking any further monetary policy steps.

Price overview

• Gold prices today: Gold rose 3.4% to $5,598.39 per ounce, the highest level on record, from an opening level of $5,416.39, while the session low was also $5,416.39.

• At settlement on Wednesday, gold gained about 4.6%, marking its largest daily rise since March 24, 2020, and its eighth consecutive daily gain, within the longest winning streak since late February 2024, amid record demand for the metal as a safe haven.

US dollar

The US dollar index fell 0.3% on Thursday, resuming losses that had paused in the previous session and moving closer to a four-year low at 95.55 points, reflecting renewed weakness in the US currency against a basket of major and minor currencies.

The dollar remains under sustained pressure, as remarks from Treasury Secretary Scott Bessent failed to dispel growing concerns over US economic policies and geopolitical developments.

Supportive comments

On Wednesday, Bessent denied reports suggesting potential US intervention in currency markets, at a time when markets are closely watching for possible intervention in the Japanese yen and with the US dollar trading near multi-year lows.

Bessent said: The United States has always pursued a strong dollar policy, but that policy means putting sound fundamentals in place. He added: If we have sound policies, capital will flow. We are working to reduce our trade deficit, which will naturally strengthen the dollar over time.

Federal Reserve

At the conclusion of its first regular monetary policy meeting of the year, and in line with most expectations, the Federal Reserve left interest rates unchanged within the 3.50%–3.75% range, the lowest level since September 2022.

The decision was not unanimous, as the Federal Open Market Committee voted 10–2, with two members (Stephen Miran and Christopher Waller) dissenting in favor of an additional 25 basis point rate cut.

The Federal Reserve said that available indicators show economic activity expanding at a “steady” pace, noting that inflation remains somewhat elevated, while labor market indicators show signs of stabilization.

Federal Reserve Chair Jerome Powell said current monetary policy is “appropriate,” adding that policymakers are “well positioned” to determine the magnitude and timing of any further adjustments to interest rates.

US interest rates

• Following the meeting, and according to CME’s FedWatch tool, the probability of keeping US interest rates unchanged at the March meeting rose from 82% to 88%, while the probability of a 25 basis point rate cut declined from 18% to 12%.

• Investors continue to price in two US rate cuts over the coming year, while the Federal Reserve’s own projections point to one 25 basis point cut.

Gold outlook

Edward Meir, analyst at Marex, said that rising US debt levels and uncertainty driven by signs of a global trade system fragmenting into regional blocs rather than a US-centered model are pushing investors toward gold.

Analysts at OCBC said in a note that gold is no longer viewed merely as a hedge against crises or inflation, but increasingly as a neutral and trusted store of value that also provides portfolio diversification across a broader range of macroeconomic regimes.

Tony Sycamore, market analyst at IG, said that while the sharp rally suggests the risk of a near-term pullback, underlying fundamentals are expected to remain supportive throughout 2026, making any dips attractive buying opportunities.

The euro rose in the European market on Thursday against a basket of global currencies, resuming gains that were briefly interrupted yesterday against the US dollar, and moving closer once again to its highest level in five years. This advance comes amid tense conditions dominating global foreign exchange markets, despite remarks from US Treasury Secretary Scott Bessent aimed at supporting exchange rate stability.

The euro’s gains are also being supported by the historic trade agreement between Europe and India, which has strengthened positive expectations for growth in the euro area. Beyond securing supply chains, the agreement opens access to the world’s largest consumer market for European mid-sized companies and the services sector, providing the European economy with additional protection against global trade shocks.

Price overview

• Euro exchange rate today: The euro rose 0.35% against the dollar to 1.1994, from an opening level of 1.1954, while recording a session low at 1.1950.

• The euro ended Wednesday’s session down 0.7% against the dollar, marking its first loss in five days, due to correction and profit-taking activity, after hitting a five-year high of 1.2083 the previous day.

US dollar

The US dollar index fell 0.3% on Thursday, resuming losses that had paused in the previous session, and approaching a four-year low at 95.55 points, reflecting renewed weakness in the US currency against a basket of major and minor currencies.

The dollar remains under sustained pressure, as comments from Treasury Secretary Scott Bessent failed to ease growing concerns over US economic policies and geopolitical moves.

On Wednesday, Bessent denied reports suggesting possible US intervention in currency markets, at a time when markets are watching closely for potential intervention in the Japanese yen and with the dollar trading near multi-year lows.

Bessent said: The United States has always pursued a strong dollar policy, but that policy means putting sound fundamentals in place. He added: If we have sound policies, capital will flow. We are working to reduce our trade deficit, and that will naturally strengthen the dollar over time.

On the monetary policy front, the Federal Reserve adopted a more optimistic stance on the US labor market and inflation risks on Wednesday, which investors interpreted as a signal that interest rates could remain unchanged for a longer period.

European economy

Thanks to the trade agreement with India, markets have become more optimistic about the outlook for the European economy. This strategic partnership helps diversify supply chains and expand the share of the services sector within a massive consumer market, supporting sustainable economic growth in Europe and reducing vulnerability to global trade disputes.

The European Union and India reached the historic trade agreement earlier this week after nearly 20 years of difficult negotiations. European Commission President Ursula von der Leyen described it as “the mother of all deals.”

European interest rates

• Money markets currently price a roughly 25% probability that the European Central Bank will cut interest rates by 25 basis points in February.

• Traders have recently adjusted expectations from rates remaining unchanged throughout the year to at least one rate cut of 25 basis points.

• To reassess these expectations, investors are awaiting further economic data from the euro area on inflation, unemployment, and wages.

Views and analysis

Ray Attrill, head of foreign exchange strategy at National Australia Bank, said Bessent’s comments came at an opportune time, and some might assume they were carefully planned, so to speak.

Attrill added that he believes the European Central Bank’s remarks are independent, but noted that the 1.20 level in EUR/USD appears to have acted as a trigger point.

He explained that the recent movement in the euro-dollar pair, which had not been particularly strong until recently, somewhat masks broader strength in the euro — a development that is likely to feed into the ECB’s inflation outlook.

The Australian dollar rose in the Asian market on Thursday against a basket of global currencies, extending its gains for a ninth consecutive session against its US counterpart and hitting a three-year high, amid a broad and sustained rally in global metals and commodities prices.

The advance was also supported by rising inflationary pressures on policymakers at the Reserve Bank of Australia, which strengthened expectations of a 25-basis-point interest rate hike in February.

Price overview

• Australian dollar today: The Australian dollar climbed 0.75% against the US dollar to 0.7091, its highest level since February 2023, from an opening level of 0.7038, while the session low was recorded at 0.7021.

• The Australian dollar ended Wednesday’s session up around 0.4% against the US dollar, marking its eighth consecutive daily gain and the longest winning streak since February 2024, following the release of hotter-than-expected inflation data in Australia.

Global metals prices

Global metals and commodities prices continue to post strong gains, with gold and silver extending their record-breaking rallies, driven by rising demand from major economies, led by China and the United States, in addition to escalating geopolitical tensions that have pushed investors toward base metals as safe-haven assets.

This surge is feeding positively into the Australian economy, which is one of the world’s leading exporters of iron ore, coal, and gold, as it supports the trade surplus and boosts revenues for mining companies.

It also provides solid backing for the government budget through higher royalty and tax revenues, giving the Australian economy greater flexibility to absorb global inflationary pressures while maintaining growth stability.

Australian interest rates

• Data released on Tuesday in Sydney showed that Australian inflation rose more than expected in the final quarter of last year, intensifying inflationary pressures on policymakers at the Reserve Bank of Australia.

• Following the data, market pricing for a 25-basis-point rate hike by the Reserve Bank of Australia in February increased from 60% to 75%.

• To reassess these expectations, investors are awaiting further economic data from Australia.

• All four major Australian banks now expect the Reserve Bank of Australia to raise interest rates by a quarter point at its meeting next week.

• Goldman Sachs and Deutsche Bank remain among the few banks still calling for interest rates in Australia to be left unchanged.

Gold prices rose sharply during Wednesday’s trading, hitting fresh record highs amid a broad-based decline in the US dollar against most major currencies ahead of the interest rate decision, as markets also digested the Federal Reserve’s policy outcome.

The move came alongside a renewed escalation in geopolitical tensions after US President Donald Trump ordered an additional naval fleet toward Iran, urging Tehran to reach a nuclear agreement with Washington and warning that any forthcoming military strike would be far more severe than the previous one.

In line with market expectations, the Federal Open Market Committee voted to keep the benchmark interest rate unchanged within a range of 3.5% to 3.75%. The decision marked a pause after three consecutive quarter-point rate cuts, which had previously been described as precautionary steps aimed at insulating the economy from a potential deterioration in the labor market.

Alongside the rate decision, the committee upgraded its assessment of economic growth and expressed less concern about labor market risks relative to inflation risks. In its post-meeting statement, the Fed said that available indicators suggest economic activity continues to expand at a solid pace. Job gains remain subdued, while the unemployment rate has shown signs of stabilization. Inflation, however, remains somewhat elevated.

A notable shift in the statement was the removal of language that had previously indicated risks to the labor market outweighed risks from inflation. This change signaled a more patient stance on monetary policy, reflecting a view that the Federal Reserve’s dual objectives of price stability and maximum employment are now more balanced.

Federal Reserve Chair Jerome Powell said there was no evidence to support the notion that global investors are hedging against dollar-related risks, and he dismissed speculation about the possibility of rate hikes instead of cuts in the near term.

Powell added that current interest rate levels are appropriate to support progress toward the Fed’s goals of full employment and lower inflation, while acknowledging that inflation remains elevated and that demand for labor has cooled noticeably.

Separately, the US dollar index rose by 0.2% by 20:53 GMT to 96.3 points, after touching a high of 96.7 and a low of 95.8 earlier in the session.

The dollar rebounded from earlier losses following comments from US Treasury Secretary Bessent, who said the United States does not intend to intervene in the yen’s exchange rate.

In trading, spot gold surged by 5.6% at 20:55 GMT to $5,368.4 per ounce.