Gold prices fell in European trading on Friday for the first time in the past four days, retreating from a seven-week high, amid corrective moves and profit-taking, in addition to pressure from the rebound of the US dollar against a basket of global currencies.
Despite the pullback, the precious metal, gold, is set to record a weekly gain, supported by the outcome of the Federal Reserve’s monetary policy meeting, which came less hawkish than markets had expected.
Price overview
• Gold prices today: Gold prices declined by around 0.4% to $4,264.77, from an opening level of $4,280.46, while recording a session high at $4,282.44.
• At Thursday’s settlement, gold prices rose by 1.25%, marking a third consecutive daily gain, and reached a seven-week high at $4,285.93 per ounce, supported by a weaker US dollar following soft US weekly jobless claims data.
US dollar
The US dollar index rose by around 0.1% on Friday, recovering from a two-month low of 98.13 points, reflecting a rebound in the US currency against a basket of major and secondary currencies.
Beyond bargain buying from lower levels, the dollar’s recovery comes as investors await clearer and stronger evidence on the path of US interest rates in 2026.
Weekly performance
Over the course of this week’s trading, which officially concludes at today’s settlement, gold prices are up by around 1.7%, on track for a second weekly gain over the past three weeks.
Federal Reserve
• In line with expectations, the Federal Reserve decided on Wednesday to cut interest rates by 25 basis points, bringing them to 3.75%, the lowest level since September 2022, marking the third consecutive US rate cut.
• The decision was not unanimous, as 9 members voted in favor of the cut, while 3 opposed it. Two members preferred to keep rates unchanged, while one member pushed for a larger 50 basis point cut.
• In its monetary policy statement, the Federal Reserve said that available indicators suggest economic activity is expanding at a moderate pace, job gains have slowed this year, and the unemployment rate has edged higher through September.
• The world’s largest central bank also confirmed that recent US economic indicators are consistent with these developments, noting that inflation remains somewhat elevated.
• The Federal Reserve kept its target interest rate projection at 3.75% for this year, 3.5% for 2026, and 3.25% for 2027.
• Federal Reserve Chair Jerome Powell said on Wednesday that a majority of Fed members supported the 25 basis point rate cut, adding that the focus is now on achieving price stability and maximum employment.
• Powell also said he does not expect interest rate hikes to be the base-case scenario going forward, stressing that the Fed is well positioned to determine the timing and extent of any additional adjustments based on incoming data and the evolving balance of risks.
US interest rates
• According to the CME FedWatch tool, pricing for the probability of keeping US interest rates unchanged at the January 2026 meeting is currently stable at 76%, while pricing for a 25 basis point rate cut stands at 24%.
• To reprice these probabilities, investors are closely monitoring further US economic data releases, in addition to comments from Federal Reserve officials.
Gold outlook
ANZ commodity strategist Soni Kumari said that gold remains in a very positive position, noting that investors are taking cues from the fact that the market is still pricing in two US interest rate cuts next year, even though the Federal Reserve’s dot plot pointed to only one cut.
SPDR
Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by around 4.01 metric tons on Thursday, lifting total holdings to 1,050.83 metric tons, the highest level since October 22.
