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Gold rallies to a record high on Trump's remarks
Gold prices rallied in European trade on Friday to a three-month high, resuming gains and approaching record highs at $2800, and about to mark the fourth weekly profit in a row.
The US dollar is stalling after less aggressive remarks from US President Donald Trump on tariffs, while he urged the Federal Reserve to cut interest rates.
Prices
Gold prices rose 0.85% to $2778 an ounce, an October 31 high, with a session-low at $2753.
On Thursday, prices lost 0.1%, the first loss in four days on profit-taking.
Gold prices marked a record high in late October 2024 at $2790.11 before entering a correction in the short and medium term.
Weekly Trades
Gold prices are up 2.75% so far this week, on track for the fourth weekly loss in a row.
US Dollar
The dollar index fell 0.5% on Friday, expanding the losses for the second session and hitting a five-week trough at 107.56 against a basket of major rivals.
A weaker dollar makes greenback-denominated gold futures cheaper to holders of other currencies.
The decline comes as the new US administration charts a more cautious path than expected on tariffs, thus reducing concerns about inflation and policy tightening measures.
Trump
US President Donald Trump spoke ahead of the World Economic Forum in Davos on Thursday, in words that were aggressive, alarmist, and threatening at times.
Trump spoke about tariffs, inflation, international relations, and said he’s going to push for lower rates in the US and worldwide.
He also sent a message to each company in the world, to come and build their products in the US with very low taxes.
But if they refused to shift their manufacturing to the US, he threatened heavy taxes.
US Rates
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in January stood at just 1%, and the odds of such a cut in March improved to 30%.
SPDR
Gold holdings at the SPDR Gold Trust fell 5.17 tons yesterday to a total of 864.19 tons, the lowest since December 19.
Euro rushes to five-week high after Trump's remarks
The euro rushed higher on Friday to a five-week high against the US dollar, expanding the gains for the second session and on track for the first weekly profit since 2023 after US President Donald Trump’s statements on cutting interest rates.
Now investors await a spate of important eurozone data later today, which would provide important clues on the performance of the economy in the first quarter of 2025.
The Price
The EUR/USD rose 0.55% today to $1.0470, the highest since December 18, with a session-low at $1.0411.
The pair closed up 0.1% on Thursday, resuming gains following weak US data.
Weekly Trades
The eurozone is up 2% so far this week against the greenback, about to mark the second weekly profit in a row, and the largest since November 2023.
Trump
US President Donald Trump spoke ahead of the World Economic Forum in Davos on Thursday, in words that were aggressive, alarmist, and threatening at times.
Trump spoke about tariffs, inflation, international relations, and said he’s going to push for lower rates in the US and worldwide.
He also sent a message to each company in the world, to come and build their products in the US with very low taxes.
But if they refused to shift their manufacturing to the US, he threatened heavy taxes.
Lagarde
European Central Bank President Christine Lagarde said in Davos on Wednesday that the eurozone inflation is expected to hit the 2% target this year.
Lagarde said the decline gives the European Central Bank the space to ease monetary policies and boost struggling economies.
As for Trump’s tariff threats, Lagarde said the ECB won’t react to Trump’s statements until they’re acted upon.
Following the remarks, the odds of an ECB interest rate cut by 0.25% in January rose from 60% to 70%.
