Gold prices fell in European markets on Thursday, extending losses for the second consecutive session and approaching a three-week low, pressured by the stronger US dollar against a basket of global currencies after the release of strong US economic data.

The data reduced the likelihood of a Federal Reserve interest rate cut in September, and in order to re-price these expectations, markets are awaiting a speech from Fed Chair Jerome Powell later today at the annual Jackson Hole Economic Symposium.

Price Overview

• Gold prices today: Spot gold fell by 0.4% to $3,325.46, down from an opening level of $3,338.83, after recording a session high of $3,340.70.

• At Wednesday’s settlement, gold lost 0.3%, resuming losses after a one-day pause, pressured by the rising dollar and US Treasury yields.

US Dollar

The dollar index rose by 0.2% on Friday, extending gains for a second straight session to the highest level in nearly two weeks at 98.83, reflecting continued strength of the US currency against a basket of major and minor peers.

This advance was driven by renewed demand for the US dollar as the best available investment in FX markets, especially following strong US sectoral data for August, confirming that the world’s largest economy continues to grow in Q3 at a better-than-expected pace, despite concerns over President Donald Trump’s aggressive trade policies.

US Interest Rates

• According to CME’s FedWatch tool: market pricing for a 25 basis point rate cut at the September FOMC meeting fell from 81% to 75%, while expectations for no change rose from 19% to 25%.

• Market pricing for a 25 bp cut in October also declined from 91% to 85%, with no-change expectations up from 9% to 15%.

Jerome Powell

Powell’s speech at Jackson Hole is scheduled for 15:00 GMT on Friday. Markets will watch closely for signals on the Fed’s policy path and the outlook for US interest rates.

Gold Outlook

• Tim Waterer, chief market analyst at KCM Trade, said: “With peace prospects between Russia and Ukraine still on the table and renewed buying of the US dollar, gold faces headwinds.”

• He added: “If Powell’s comments at Jackson Hole are interpreted as dovish, the dollar could weaken, allowing gold prices to rise again.”

SPDR Holdings

SPDR Gold Trust, the world’s largest gold-backed ETF, reported a 1.44 metric ton outflow on Thursday — its third consecutive daily decline — bringing total holdings down to 956.77 metric tons, the lowest since August 6.

The euro slipped at the open of European trading on Friday to a two-week low against the US dollar, extending losses for a second consecutive session and heading for a weekly decline. The move came as investors focused on buying the greenback as the best available investment, particularly after expectations of a Federal Reserve rate cut in September receded.

Expectations for a European Central Bank rate cut in September have also weakened, given entrenched inflationary pressures. To reprice those odds, investors are awaiting ECB President Christine Lagarde’s speech on Saturday at the annual Jackson Hole symposium.

Price Overview

Euro exchange rate today: The euro fell 0.2% to $1.1583, its lowest since August 6, from an opening level of $1.1606, after touching a high of $1.1617.

On Thursday, the euro closed down 0.4% against the dollar, its third loss in the past four sessions, following strong US economic data.

Weekly Performance

For the week to date, the euro is down more than 1% against the US dollar, on track for its first weekly loss in three weeks.

US Dollar

The dollar index rose 0.2% on Friday, extending gains for a second session to reach a two-week high at 98.83 points, reflecting continued strength of the US currency against a basket of majors and minors.

This strength has been fueled by renewed demand for the dollar as the best available investment in FX markets, particularly after robust US data in August confirmed that the world’s largest economy continues to grow at a stronger-than-expected pace despite headwinds from President Donald Trump’s aggressive trade policies.

US Interest Rates

According to CME FedWatch: odds of a 25-bp Fed rate cut in September fell from 81% to 75%, while expectations of leaving rates unchanged rose from 19% to 25%.

Markets are now awaiting Fed Chair Jerome Powell’s speech later on Friday at the Jackson Hole symposium to reprice those expectations.

European Interest Rates

Recent inflation data in the euro area confirmed entrenched price pressures facing ECB policymakers.

According to Reuters sources, a clear majority at the ECB’s latest meeting favored holding rates steady in September, for the second meeting in a row.

Money markets are currently pricing less than a 30% chance of a 25-bp cut in September.

Investors will be closely watching Lagarde’s speech at Jackson Hole on Saturday for additional signals.

Outlook for the Euro

At Economies.com, we expect that if Powell’s comments turn out more hawkish than markets currently anticipate, the odds of a September rate cut will recede further, which could drive the euro to extend losses against the US dollar.

The Japanese yen declined in Asian trading on Friday against a basket of major and minor currencies, deepening its losses for the second consecutive session versus the US dollar, hitting a three-week low. The drop came as expectations of a US Federal Reserve rate cut in September receded.

The Japanese currency is on track to post its biggest weekly loss in a month and a half, despite stronger-than-expected data on core inflation in Japan, which kept alive the possibility of a rate hike by the Bank of Japan.

Price Overview

Yen exchange rate today: The dollar rose more than 0.2% against the yen to ¥148.69, the highest since August 1, from an opening level of ¥148.37, after touching a low at ¥148.24.

On Thursday, the yen ended down 0.7% against the dollar, its first loss in three days, after strong US economic data.

US Dollar

The dollar index rose 0.1% on Friday, extending gains for a second session to reach a two-week high at 98.70 points, reflecting continued strength of the US currency against a basket of majors and minors.

This momentum is being driven by renewed demand for the dollar as the best available investment in FX markets, following robust US data in August confirming that the world’s largest economy continues to grow at a pace exceeding forecasts, despite headwinds from President Donald Trump’s aggressive trade policies.

US Interest Rates

Following those data, CME FedWatch showed that the probability of a 25-bp rate cut in September fell from 81% to 75%, while odds of leaving rates unchanged rose from 19% to 25%.

To reprice those expectations, global markets are now awaiting Fed Chair Jerome Powell’s speech later today at the annual Jackson Hole symposium.

Weekly Performance

So far this week, the yen is down about 1.1% versus the dollar, heading for a second loss in three weeks and its biggest weekly decline since early July.

Japanese Inflation

Data from Tokyo on Friday showed that core consumer prices rose 3.1% in July, above the 3.0% consensus, after climbing 3.3% in June.

These figures underscore persistent inflationary pressures facing Bank of Japan policymakers, strengthening the case for another rate hike before year-end.

Japanese Interest Rates

Market pricing for a 25-bp rate hike by the BOJ in September is steady at around 40%.

Investors await more data on inflation, unemployment, and wages to recalibrate expectations.

BOJ Governor Kazuo Ueda is scheduled to speak at Jackson Hole, with comments expected to offer further guidance on the normalization path.

A survey showed that 63% of economists expect the BOJ to raise the policy rate to at least 0.75% by year-end, up from 54% in July’s survey.

Meanwhile, 92% expect the BOJ to keep the rate at 0.50% through September’s meeting.

Ethereum prices declined on Thursday amid a broader sell-off in risk assets, particularly cryptocurrencies, as investors awaited Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium.

Markets are closely watching Powell’s remarks on Friday, with expectations pointing to a 25-basis-point rate cut at the Fed’s September meeting.

Fresh US data added to the cautious mood. Initial jobless claims rose by 11,000 to 235,000 in the week ending August 16, the highest in two months, versus expectations of 226,000. The prior week’s unadjusted reading stood at 224,000.

Meanwhile, S&P Global’s composite PMI for US output climbed to 55.4 in August from 55.1 in July, its highest in eight months. Manufacturing activity also improved sharply, with the PMI rising to 53.3 from 49.8, its strongest level in 39 months and signaling expansion. In contrast, the services PMI dipped slightly to 55.4 from 55.7, reflecting slower growth in the sector.

Ethereum

As of 20:59 GMT, Ethereum dropped 2.9% to $4,222.8 on CoinMarketCap.