Gold prices fell in European trading on Monday, extending losses for the second consecutive session and moving toward a two-week low. The metal is also at risk of losing its footing above the key psychological level of $4,000 per ounce amid weaker safe-haven demand as trade tensions between the United States and China continue to ease.

The Federal Reserve’s highly anticipated policy meeting begins Tuesday, with a decision due Wednesday. Markets currently expect a 25-basis-point interest rate cut — the second consecutive reduction in US borrowing costs.

Price Overview

• Gold prices fell 1.4% to $4,053.94 from an opening level of $4,112.53, after touching an intraday high of $4,112.53.

• On Friday, gold slipped 0.35%, resuming its losses after a brief recovery from a two-week low of $4,004.56 per ounce.

• The metal lost 3.3% last week, marking its first weekly decline since August, as profit-taking accelerated from an all-time high of $4,381.73 per ounce.

• That decline ended the longest winning streak since June 2020, which had lasted nine consecutive weeks.

Easing Trade Tensions

On Sunday, senior economic officials from the US and China held key talks to outline a framework for a potential new trade agreement expected to be presented to President Donald Trump and Chinese President Xi Jinping in the coming days.

The two leaders are scheduled to meet Thursday in South Korea — their first encounter since the start of Trump’s second term — in what is expected to be a pivotal moment for bilateral relations, particularly concerning global trade and geopolitical stability in Asia.

Federal Reserve Outlook

The Fed’s two-day policy meeting begins Tuesday, with a decision due Wednesday. Markets widely expect a 25-basis-point rate cut, marking the second straight reduction in US rates.

The accompanying policy statement and remarks from Fed Chair Jerome Powell are expected to provide clearer signals on whether additional rate cuts could follow later this year.

According to CME’s FedWatch tool, markets currently price in a 97% probability of a 25-basis-point cut this week and just 3% odds of no change.

Outlook for Gold

Kyle Rodda, an analyst at Capital.com, said: “The potential trade deal between the US and China came as a surprise and was generally seen as a positive development for markets — though, of course, that’s negative for gold.”

He added: “Market momentum has begun to cool, and sentiment is more neutral now. The key reason gold remains supported is the expectation of continued fiscal and monetary easing in the months ahead. If that persists, gold is likely to maintain its upward trend.”

SPDR Holdings

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — fell by 5.44 metric tons on Friday to 1,046.93 metric tons, marking the lowest level since October 16.

The euro rose in European trading on Monday against a basket of major currencies, extending gains for the fourth consecutive session against the US dollar, supported by weakness in the greenback ahead of an expected Federal Reserve rate cut later this week.

With renewed inflationary pressures across the eurozone, expectations for a European Central Bank (ECB) rate cut during this week’s meeting have faded. The meeting’s details are expected to offer clearer guidance on the path of European interest rates for the rest of this year and into next.

Price Overview

• EUR/USD rose about 0.2% to $1.1648, up from an opening level of $1.1626, after touching an intraday low of $1.1620.

• The euro closed Friday’s session up around 0.1% against the dollar — its third straight daily gain — recovering further from a two-week low of $1.1577.

• However, the single currency lost 0.25% last week, marking its second weekly decline in the past three weeks as investors favored the US dollar as a safe alternative asset.

US Dollar

The dollar index fell 0.2% on Monday, retreating from a two-week high and reflecting lower demand for the US currency against a basket of global peers.

Beyond profit-taking, the dollar’s pullback comes ahead of an expected 25-basis-point rate cut by the Federal Reserve this week — which would mark the second consecutive reduction in US interest rates.

European Central Bank

• The ECB will hold its policy meeting on Wednesday and Thursday to assess appropriate monetary settings in light of recent eurozone economic developments.

• The bank is widely expected to keep interest rates unchanged at 2.15%, the lowest level since October 2022, for the third consecutive meeting.

• Markets are awaiting further signals about when the ECB may resume its easing cycle and begin cutting rates before the end of the year.

The Japanese yen fell in Asian trading on Monday at the start of the week, extending losses for the seventh consecutive session against the US dollar and hitting a three-week low, weighed down by expectations surrounding the new Prime Minister Sanai Takaichi’s expansionary economic policies.

A summit between Takaichi and US President Donald Trump is scheduled for Tuesday in Tokyo as part of Trump’s official visit to Japan, which begins today. The talks are expected to focus on strengthening economic cooperation between the two nations, following the recent trade agreement that laid the groundwork for a new phase of strategic partnership.

The Bank of Japan is also expected to discuss this week whether conditions are suitable to resume rate hikes as fears of tariff-induced recession ease.

Price Overview

• USD/JPY rose by about 0.3% to 153.18 yen — the highest since October 10 — from an opening level of 152.76 yen, with an intraday low of 152.65 yen.

• The yen ended Friday’s session down 0.2% against the dollar, marking its sixth consecutive daily loss — the longest losing streak since early October.

• For the week, the yen lost about 1.5% versus the dollar, its second weekly decline in three weeks, pressured by expectations of new stimulus measures under Takaichi’s government.

New Stimulus Package

Government sources told Reuters that Prime Minister Sanai Takaichi is preparing an economic stimulus package likely to exceed 13.9 trillion yen ($92 billion) to help households cope with rising prices and inflation. The final size of the package is still being finalized and is expected to be announced early next month.

Takaichi–Trump Summit

President Donald Trump arrived in Japan on Monday and will hold a summit with Prime Minister Takaichi the following day to discuss ways to enhance economic and trade cooperation between the two countries. The meeting is expected to address regional and global issues of mutual concern, including relations with China, Indo-Pacific security, and the future of global supply chains.

The visit underscores both nations’ efforts to strengthen their strategic partnership and promote stability and growth across the Asia-Pacific region.

Bank of Japan

• The Bank of Japan meets Wednesday and Thursday this week to assess monetary policy for the world’s fourth-largest economy, with expectations it will leave interest rates unchanged for the sixth consecutive meeting.

• Policymakers are likely to discuss whether conditions are now suitable to resume gradual rate hikes amid easing recession fears linked to global tariffs.

• Prime Minister Takaichi has urged the central bank to coordinate efforts toward achieving inflation driven more by wage growth rather than cost pressures.

Most cryptocurrencies rose on Friday, posting strong weekly gains as risk appetite improved following softer US inflation data and easing trade tensions.

Government data released today showed that the US annual consumer price inflation rate rose 3% in September, below expectations of 3.1%.

Based on these figures, the CME FedWatch tool indicated a sharp jump in the probability of an interest rate cut in December to 98.5%, up from 91% before the data release, while odds for a cut at next week’s meeting remained between 98% and 99%.

Meanwhile, the University of Michigan’s final consumer sentiment reading for October fell to 53.6 from 55.1 in September, and the index of current economic conditions dropped to its lowest level since August 2022.

The government shutdown in the United States entered its 24th day, while markets continued to monitor corporate earnings results.

Optimism also spread across markets amid signs of easing trade tensions between the United States and China, with investors awaiting talks between President Donald Trump and Chinese President Xi Jinping in South Korea.

Ripple

As for trading, Ripple (XRP) rose 4.1% to $2.50 at 20:27 GMT on CoinMarketCap, posting a 9.1% gain for the week.