Gold prices fell in European trade on Thursday on track for the third loss in a row, plumbing two-week lows under pressure from the stronger US dollar.

The dollar’s rebound comes as global trade tensions receded, while the odds of a Fed rate cut in May dropped as well.

The Price

Gold prices fell 2.05% today to $3221 an ounce, the lowest since April 15, with a session-high at $3290.

On Wednesday, gold lost 0.9%, the second loss in a row as the dollar muscled up.

Gold surged 5.3% in April, the fourth monthly profit in a row on haven demand as the US-China trade war flared back then.

The Dollar

The dollar index rose 0.4% on Thursday, expanding the gains for the third straight session and scaling a two-week high at 100.03 against a basket of major rivals.

A stronger dollar makes the greenback-denominated gold futures less attractive to holders of other currencies.

Trade Developments

Chinese reports said the US has communicated with China recently to discuss tariffs, with President Donald Trump saying there’s a high probability of reaching a deal with China.

He also pointed to potential trade deals with India, South Korea, and Japan soon, as he seeks to utilize his tariffs to force beneficial results.

US Rates

Several Fed officials don’t believe there’s an urgent need to review monetary policies soon.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.

The odds of such a cut in June stood at a healthier 65%.

SPDR

Gold holdings at the SPDR Gold Trust fell 2.87 tons yesterday to a total of 944.26 tons, the lowest since April 9.

The euro fell in European trade on Thursday against a basket of major rivals, expanding the losses for the third straight session against the dollar and plumbing two-week lows amid concerns about a wide US-eurozone interest rate gap.

The European Central Bank is widely expected to cut interest rates in June, while the Federal Reserve is unlikely to change policies this month.

The Price

The EUR/USD price fell 0.35% today to $1.1287, the lowest since April 16, with a session-high at $1.1331.

The pair closed down 0.5% on Wednesday, the second loss in a row as the greenback rebounded strongly.

The euro rallied 4.75% last month against the dollar, marking the third monthly profit in a row, and the largest since late 2022 following huge German stimulus plans, while Trump paused his tariffs on the EU for 90 days.

Interest Rate Gap

The US-eurozone interest rate gap expanded to 210 basis points after the European Central Bank cut rates in April, with the gap potentially expanding in upcoming months.

European Rates

Sources reported that some ECB officials see a high chance of a rate cut in June.

President of the Deutsche Bundesbank Joachim Nagel said that German recession this year can’t be ruled out.

European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.

Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary. 

Markets are currently pricing in a 60% chance of an ECB interest rate cut in June. 

The Japanese yen fell in Asian trade on Thursday on track for the third straight loss against the US dollar, and about to plumb multi-week lows following the Bank of Japan’s policy meeting.

As expected, the BOJ held interest rates unchanged while reducing growth and inflation forecasts for 2025 due to the impact of US tariffs on global demand.

The Price

Th USD/JPY pair rose 0.55% today to 143.85, with a session-low at 142.87.

Th yen lost 0.55% on Wednesday, the second loss in a row amid positive developments in trade talks between the US and major trade partners.

The BOJ

The Bank of Japan voted today to hold interest rates unchanged at 0.5%, the highest since 2008 as expected.

The vote was unanimous in favor of holding interest rates, as policymakers prefer to take more time to assess the impact of US tariffs on the export-heavy economy.

Policy Statement

The BOJ said in its policy statement that it’ll continue hiking interest rates if the economic and inflationary predictions were carried out.

It said it’ll continue to monitor economic developments and price without any preset projections, with a heavy reliance on data.

Economic Forecasts

The Bank of Japan reduced its 2025 growth forecasts from 1.1% to 0.5%, and the 2026 growth forecast from 1% to 0.7%.

It also reduced 2025 inflation forecasts to 2.2% from 2.4%, and the 2026 forecasts to 1.8% from 2.1%.

Japanese Rates

The current odds of a BOJ interest rate hike in June fell below 25%.

Now traders await more crucial Japanese inflation, wages, and unemployment data in upcoming days to gather more clues.

The Bank of Japan voted today to hold interest rates unchanged at 0.5%, the highest since 2008 as expected.

The vote was unanimous in favor of holding interest rates, as policymakers prefer to take more time to assess the impact of US tariffs on the export-heavy economy.