Gold prices rose in European markets on Wednesday, extending their recovery for the second day in a row from a three-week low, supported by continued buying at lower levels and a pause in the US dollar’s upward momentum in the foreign exchange market.
The Federal Reserve is set to conclude later today its fifth scheduled meeting of 2025 to discuss appropriate monetary policy for the world’s largest economy. Markets widely expect interest rates to remain unchanged for the fifth consecutive meeting.
To reassess the likelihood of a rate cut in September, markets are awaiting a series of key labor market data releases from the United States.
Price Overview
• Gold Price Today: Gold rose by 0.25% to $3,333.73, up from the session’s opening at $3,326.51, after hitting a low of $3,321.98.
• On Tuesday, gold settled with a 0.35% gain — its first daily rise in the past five sessions — recovering from a three-week low at $3,301.94 per ounce.
US Dollar
The US Dollar Index declined by 0.2% on Wednesday, pulling back from a five-week high at 99.14 points, reflecting a pause in the greenback’s rally against a basket of global currencies.
In addition to profit-taking, dollar levels are retreating as investors hold off on opening new positions ahead of the Fed’s policy meeting, which could offer stronger signals about a possible rate cut in September.
Federal Reserve
The Federal Reserve will conclude its fifth regular meeting of 2025 later today to assess appropriate monetary policy amid evolving economic conditions. Interest rates are expected to remain unchanged at 4.50% for the fifth straight meeting.
The Fed’s interest rate decision and policy statement will be released at 19:00 GMT, followed by Chair Jerome Powell’s press conference at 19:30 GMT.
Powell’s remarks are expected to offer more clarity on the likelihood of rate cuts this year, especially in light of recent economic developments and fading concerns over Trump’s tariff policies.
US Interest Rate Expectations
• According to CME Group’s FedWatch tool, the probability of a 25-basis-point rate cut at today’s meeting is priced at 2%, with a 98% chance of no change.
• The probability of a 25-basis-point cut in September currently stands at 64%, versus a 36% chance of rates remaining unchanged.
• To reprice these odds, markets await several important labor market releases this week, including today’s private sector employment report, Thursday’s weekly jobless claims, and Friday’s July non-farm payrolls report.
Gold Outlook
Kelvin Wong, Market Analyst for Asia-Pacific at OANDA, noted: “There is a possibility the Fed could adopt a hawkish stance, which is evident from US Treasury yields,” adding that “the strength of the US dollar has also faded at this stage.”
Wong added: “If gold prices surpass $3,350 by the end of this week, considering the upcoming European inflation data and the US jobs report, this could restore upward momentum, at least in the short term.”
SPDR Gold Trust
Holdings of the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — remained unchanged yesterday at 956.23 metric tons.
